The world of cryptocurrencies & bitcoin explained

The world of cryptocurrencies & bitcoin explained

What is cryptocurrency? Is it really likely to replace our current cash system? Stacker answers all these questions and more in our closer look at Bitcoin and the world of cryptocurrencies. Using news reports, financial websites, and industry resources, we’ve answered the 10 most pressing questions you have about cryptocurrencies. While the topic is a complex one, we’ve done our best to discuss it in layman’s terms and have avoided the more highly technical aspects that tend to bog down the discussion rather than carry it forward.

Three hundred thirty-one years ago, the first piece of paper money was printed in the United States. The Massachusetts Bay Colony supposedly issued those first bills to fund military action in King William’s War. Flash forward to today, and those bills are as ubiquitous as the British pound or Chinese renminbi. In recent years, however, there have also been talks that those bills may be replaced with a newer form of money altogether: cryptocurrency.

So read on to learn who invented this new form of money, how it’s mined, and what, exactly, Elon Musk has to do with it all. You’re sure to walk away with a better understanding of what Bitcoin is and how it affects your life.

What is a cryptocurrency?

In short, they are digital currencies that are protected by cryptography (a method of safeguarding information through complex codes). This encryption makes them incredibly secure and almost impossible to counterfeit or double-spend. Most cryptocurrencies work using a new technology called blockchain, a decentralized technology that’s spread across many computers.

What is a blockchain?

blockchains are a new form of technology that records information. Termed distributed ledger technology, these blockchains keep records across a large number of computers (rather than on a single computer server), grouping the data in sequential blocks. Once locked into place, these blocks cannot be changed or altered, meaning that records of who mined a currency or spent it are never called into question, and cryptocurrencies can never be stolen the way a credit card can.

Is there a central authority overseeing cryptocurrencies?

No. By their very definition, Bitcoin and other cryptocurrencies are completely democratic and aren’t overseen by a central authority in the way that the U.S. dollar is. A true peer-to-peer payment network, cryptocurrencies can only work if all participants use the same software and abide by the same rules. This provides a strong incentive for a consensus to be maintained, or else Bitcoin will cease to have any value and all users will lose their cryptocurrency wealth. How are cryptocurrencies mined?

The interesting thing about cryptocurrencies, and bitcoin, in particular, is that they are largely self-perpetuating (with the exception of the genesis block). New bitcoins are mined (or minted) by being the first person to correctly verify one megabyte of existing bitcoin transactions. This is incredibly time-consuming work that involves a lot of computation power, but these days it is not the only way to obtain bitcoin. Bitcoin can also be bought or earned by doing things like publishing an article on a website that pays via cryptocurrency. Can bitcoin be used in everyday purchases?

Yes, and no. In 2021, much of what cryptocurrencies are is more theoretical than practical, which is further demonstrated by their purchasing power—or lack thereof. While bitcoin can and has been used to buy real things (you can use a third-party app called Purse to use bitcoin to buy items on Amazon, and it has often been used on the Silk Road to buy drugs), you certainly can’t just walk into a grocery store and buy a gallon of milk with a bitcoin or two. In fact, even apps like Purse or PayPal, which allow purchases to be made with bitcoin, convert the cryptocurrency into fiat money before making the transaction, so you aren’t technically spending that bitcoin or Dogecoin, but rather its legal tender value. Why were cryptocurrencies invented?

So if you can’t spend a bitcoin or unit of cryptocurrency, why were they invented? The answer may lie in the text of the genesis block of Bitcoin, which reads: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” (Alluding to a headline from The London Times.) This seems to imply that the founder had a lack of faith in the banking system and was looking for an alternative way to store and protect their wealth, as well as wanting to disrupt the control of the money supply and empower the individual when it came to their finances. Who created cryptocurrencies?

Bitcoin is widely considered to be the world’s first cryptocurrency. Yet, despite having existed for just over a decade, no one actually knows who founded it. The original Bitcoin white paper that outlines how the currency works was published by Satoshi Nakamoto, the same person who mined the first bitcoin block, but the individual’s (or group of individuals’) identity remains a mystery. There are dozens of theories out there about who they are, but none have been definitively proven, making this a Holy Grail-level mystery of our time. Why are cryptocurrencies important?

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Freeland bamboo business bangs
Freeland bamboo business bangs
The company, owned and operated by one Freeland couple, has been lauded by clients for its efficiency and quality. A new South End landscaping company is ...
iPhone 13 Teardowns Reveal Battery Capacities Across All Four Models
iPhone 13 Teardowns Reveal Battery Capacities Across All Four Models
Like the iPhone 13, and many previous models, iPhone 13 Pro is sealed with adhesive and its display cables are once again disposed on the left side of the ...
Next Week, Sweet Surrender will be available for Oculus Quest and PC VR
Next Week, Sweet Surrender will be available for Oculus Quest and PC VR
The game touches down on September 30. Developer Salmi Games just confirmed the news. Sweet Surrender will be getting a full launch on the Oculus Quest store ...
With Charitable Effort, Apesonic Launches Sleep Aid Earbuds for Wildlife on Indiegogo
With Charitable Effort, Apesonic Launches Sleep Aid Earbuds for Wildlife on Indiegogo
But music and technology aren’t our only passions – we care deeply about the world we live in and where it’s headed. That’s why we give a dollar for every ...
New rumor claims the Samsung Galaxy S22 Ultra will have an S Pen slot
New rumor claims the Samsung Galaxy S22 Ultra will have an S Pen slot
Ice universe joins several analysts in believing the Note line has had its day, meaning the Note 20 will forever remain the last in the series. The fact ...
Adults struggling to get extra protection under the Financial Exploitation Act
Adults struggling to get extra protection under the Financial Exploitation Act
“With the appropriate training and procedures in place, Michigan’s financial institutions will be better equipped to identify and report exploitation to ...
The eagles activate TE Zach Ertz from the Reserva / COVID-19 list
The eagles activate TE Zach Ertz from the Reserva / COVID-19 list
“You have to back it up of what you want to have in. Do you want to be in 12-personnel, do you want to be in 11-personnel? And so you just have to back up ...
DuPont Is Moving Forward…with Small Businesses – The Suburban Times
DuPont Is Moving Forward…with Small Businesses – The Suburban Times
We couldn’t save every business but most survived. We are now in recovery and business is once again thriving in DuPont. Our creative entrepreneurs have ...
'I want a solution to this problem' |  Business owner in downtown Austin reacts to implementation of camping ban
NY prepares for staff shortage with health vaccine mandate
The order would allow health care professionals who are licensed in other states or countries, are recent graduates, or are formerly practicing health care ...
Contenders trumpet credentials in close vote to replace Merkel
Contenders trumpet credentials in close vote to replace Merkel
Experts say one reason why this year’s German election is tighter and less predictable than usual is that the candidates are relative unknowns to most ...
Show next
Compsmag - Latest News from tech, business and health
Logo