What Is Cryptocurrency?

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cryptocurrencies

It’s understandable, not everyone is well conversant with the term cryptocurrency. Especially after the onslaught that has been going on for more than a year now.

But we try and dig deeper and try to answer the question in the simplest explanation you can come across in the internet, or anywhere else, so to say. Cryptocurrencies are the money of the future. The additional definition to this is somehow geeky and most people don’t understand it.

However, its significance of crypto has not been thrown under the bus whatsoever. It’s hard to find a major accounting firm, a major bank, a software company and even a government that has not done its research on the Blockchain project.

The presence of Blockchain has for sure shaken ground for some companies. Thomas Carper says that bitcoin has either captured the imagination of some companies, struck fear into some or confused the rest.

But beyond the noises about crypto, developers, scientists, consultants and even bankers and the majority of people don’t understand or have limited knowledge of what cryptocurrencies are.

The Origins Of Cryptocurrency

Did you know that cryptocurrencies emerged as a side product of another invention? It wasn’t the intention of bitcoin’s inventor Satoshi Nakamoto.

His announcement in late 2008 says that he had developed a peer to peer electronic cash system that would prevent double spending. He added that it was completely decentralized and would have no server or authority whatsoever.

In his announcement, Satoshi recognized earlier efforts of creating digital money. Efforts emanating from the nineties that bore no fruit. After witnessing their failed attempts, Satoshi tried building the digital cash system without a central entity. And this was the birth of cryptocurrencies.

Decentralization became the missing piece in trying to create digital cash. It’s a bit technical and complex but once you understand it, you will know more about cryptocurrencies than most people.

Realizing Digital Cash

For digital cash to work, you need a payment network with accounts, transactions and balances. Now, the major problem with payment networks is the prevention of double spending. This was the work done by central servers that kept the records.

But in a decentralized system, we have already done away with servers. Every entity of the network is now needed to do the job. Every peer has a list of all transactions to authenticate their validity and prevent double spending.

One minor balance and everything is broken. So, everything needs to be in consensus. In the traditional system, the central authority had authority over the correct balances. Now the authority is gone, how do we achieve the consensus?

Satoshi showed us how in a time when it was thought to be impossible. He proved cryptocurrencies are a part of the solution and it has turned out to be enthralling and fascinating.

So, What Are Cryptocurrencies Really?

Now, back to the question of cryptocurrencies. Take away all the noise around cryptocurrencies on what they are and what not. You will find the simplest definition to cryptocurrencies is limited series in a database that is not changeable without the fulfilment of specific conditions. It does seem ordinary but that is exactly what cryptocurrencies are.

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