From an age of barter system and using salt and cocoa beans for currency, we have definitely come a long way to the age of Blockchain and Bitcoins. Welcome to the world of cryptocurrency. So what is cryptocurrency? It can be defined as digital cash that can be transferred online, directly between two users, without interference from any governmental or financial institution. Bypassing such intermediaries(Banks), puts the user in direct control over their digital assets and makes it a decentralized market. It is a fresh change from decades of trusting third parties to facilitate transactions and is a power we have never had before. All transactions are confirmed by ‘Miners’ who are individuals who confirm every transaction as legit and record them in an irreversible shared ledger called the ‘Blockchain’. The ‘Blockchain’ is made up of individual ‘Blocks’ which are similar to folders containing transaction information which can be viewed by all connected miners. To prevent forged transactions, the miners are required to derive a hash( a product of a cryptographic function), that connects each new block with its predecessor. Any attempt at forgery would require a miner or group of miners to derive hash functions for the entire blockchain, or create a new chain which would not be feasible against the already existing verifiable blockchain. This peer-to-peer verification system based on cryptography ensures that transactions are not altered. Cryptocurrency is immune to corruption because it is not secured by people or by trust, but by math. The probability of a cryptocurrency address being compromised is lower than an asteroid landing in your backyard.
How does a transaction take place?
There are no actual cryptocurrencies. Only records of cryptocurrency transactions exist. A cryptocurrency user holds two pieces of information – A cryptocurrency address and a private key. The cryptocurrency address is generated randomly and is a sequence of letters and numbers. The private key is another similar sequence but unlike the address, the private key is kept secret. Think of the cryptocurrency address as a safe with a glass door. Everyone can view what is in it but only the private key can add or take from it. Let’s say Alex sends some cryptocurrency to Bob, the transaction will have three pieces of information.
- An input (This is a record of the cryptocurrency address that Alex received the cryptocurrency from. Ex : Alice)
- An amount . This is simply the amount of cryptocurrency that Alex wants to transfer to Bob.
- An output. This is Bob’s cryptocurrency address.
To make the transfer, Alex uses his private key to sign a message with the input, amount and output(Bob’s address). He then sends this from his cryptocurrency wallet to a cryptocurrency network where miners verify the transaction, putting it into a block and eventually add it to the irreversible blockchain.
Properties of Cryptocurrency
- Irreversible – Once a transaction is confirmed, it cannot be reversed.
- Pseudonymous – Accounts and transactions cannot be attributed to identities. Although transaction flows can be analysed, real world identities cannot be pinpointed.
- Fast global network – Since it take place on a global network and authorisations from third parties are not involved, transactions are confirmed in minutes, with no effect from physical distance between users.
- Secure – Strong cryptography and peer-to-peer verification makes cryptocurrency a safe and secure medium for transactions.
- Permissionless – There is no outsider control while using cryptocurrency. It’s a software open for all.
- Controlled supply – A schedule in the written code caps the production of cryptocurrency, protecting it from inflation.
- No debt, only bearer – the money shown in your bank accounts is created by debt. Cryptocurrency does not represent debts. It represent Itself. It is immune to inflation or deflation by manipulation of monetary supply.
Why create your own Cryptocurrency?
Cryptocurrency paves the path for a more dynamic and efficient way to run the global economy. It promises to preserve and increase its own value and is secure from political influence. It provides for a fast and comfortable means for global transactions and provides scope for a fast-growing market for investors and speculators. Cryptocurrency exchanges today surpass major European stock exchanges in daily trade volume. Creators of the first cryptocurrencies are the multi billionaires of today. Go ahead and create your own cryptocurrency with us and see your vision pay off in a matter of few years. An UBUNTUcoin or a EONcoin you create today could be the next big breakthrough in the world of cryptocurrency. Once you create your cryptocurrency, it builds its own value as miners and users eventually start using it. Global dominance need not be your goal, given that in 5000 years, no single currency has dominated the globe. Instead, prepare a local currency that will serve the global market. In a market where cryptocurrency use is defined by neighbourhood boundaries, there is no need for any cryptocurrency to win. There is room for all. The potential of these digital currencies is such that, your cryptocurrency value can grow upto 1000% in a matter of weeks. Cryptocurrency promises to change the world and they are here to stay. The revolution has started and is swelling by the day. You can either choose to be a mute spectator or ride the wave to the future.