Since 2017 there has been massive rage about crypto-currency, and everyone has an opinion on what exactly it is, but most of the answers only end up confusing you. This article will clear the air and give you a general overview of what exactly crypto-currency and about its origin,
Crypto-currency is a form of digital currency that is designed to be a replacement for real-world money. The whole system is wired by cryptography that enables maximum security for all the parties that are involved in the transaction. Not only is cryptography used in the verification process but is also used in the production of new units of crypto-currency. In simple terms, crypto-currency can be looked as data in a database that can only be exchanged if all the underlying conditions are met. But crypto-currency is more than just data since it possesses value that is translatable to real-world money.
People often mistakenly believe that crypto-currency is a new concept, but the concept has been around since the early 90s tech boom. Three key players had emerged during that time, they were Flooz, Beenz and DigiCash; but all of them failed to materialise any form of success. The reason behind the failure of these companies failed because of the resistance to virtual cash at that time along with cases of fraud and financial altercations.
After the failure of these three companies, the concept of digital currency was a taboo topic in the tech and start-up community. This was the case till 2009, when an anonymous user or users banded together under the pseudo name Satoshi Nakamoto launched bitcoin, they claimed that bitcoin was a decentralised peer-to-peer virtual cash system. They made it decentralised so that there wasn’t a need to have servers or an administrative authority to govern the virtual transactions. In a traditional system, an organization or an individual is the point of control who handles the ledger which prevents fraudulent practices from taking place but these leaves private information of the participants in the hand of a single point of authority. In the bitcoin system, blockchain systems were deployed to counter the need for a single controlling system, essentially what that means is a decentralised system has a public ledger that allows all the users to see the transactions of every other user. The only downside is everyone would know how much you have.
So for a bitcoin transaction to occur, the public ledger should contain the unique keys of the sender and the buyer, and for a transaction to be completed, the sender needs to use his private key to confirm the transaction. Most people believe that since the ledger is public knowledge, they can just steal the information of the users but cracking the cryptographic code can only be done by miners who crack the puzzle and confirm the transaction. Once the cryptographic puzzle is cracked, the miner gets a prize and the transaction fees, or in other words, the miner is your faceless cashier doing the backend job.
The utilisation of cryptography helps the users to overcome the need for a central authority or the need for blind trust. The system is designed to break if the nodes of the decentralised network disagree on a single balance, but there are many virtual key-safes in place to prevent such a disaster from happening.
Crypto-currency is a growing and thriving market that in a way levels the playing field and makes transactions more user-friendly. This article is to just give a brief about the whole process and is not an in-depth take on crypto-currency.