What is Cryptocurrency?
Cryptocurrency is an internet-based medium which uses cryptographic functions for a financial transaction. In easier terms, it is a financial transaction that is performed through a series of encryptions. The financial transaction is sent between two parties that have a cryptocurrency address held in a wallet. The difference between cryptocurrency and regular currency is that it is decentralized. This means the currency is held by each individual and not controlled by a central authority, such as a bank.
Think of cryptocurrency like a peer-to-peer network, only you aren’t sharing files, you are sending digital currency. All the transactions are usually held in a public ledger that cannot be manipulated or changed once the transaction has been started. Once the transaction is confirmed, it is set in stone and cannot be changed. This creates a sense of security within the blockchain.
There are several cryptocurrencies out there, the most popular being Bitcoin. However, with the blockchain being public, people can still see where the money is going and to whom. With certain cryptocurrencies such as Monero, the transactions and blockchain are private and cannot be traced, ultimately creating a truly anonymous network of finance.
In a sense, cryptocurrency has one main difference: confirmation. When all the miners in the network confirm transactions on the blockchain (through mining), it basically double-checks that the transaction has been made and to whom. When miners perform confirmations, they are rewarded with the cryptocurrency that they are mining. Some coins are easier to mine than others. For example, Stellite is very easy to mine and is ASIC resistant. This means anyone with an ordinary computer can mine the coin, whereas Bitcoin can only be mined with special hardware specifically developed to mine Bitcoin.
We know this is a lot of information to take in. Not everyone is apt to adopt a new form of currency when we have been accustomed to using traditional banks all of our lives. However, cryptocurrency has proven that even a revolutionary new way of finance can and will change the way we transact with other people, send and receive money, and buy goods and services.