What is Cryptocurrency?

What is Cryptocurrency? digital currency or cryptocurrency is a special form of digital money that is based on the science of cryptography.

Most cryptocurrencies use the Chinese blockchain to take advantage of key features such as decentralization, transparency and immutability.

The decentralized nature of cryptocurrencies means that they are not controlled by any entity, group or organization.

Cryptocurrencies can be sent directly to another person without the intervention of any intermediary on the Internet. This means that you will not need to open a bank account, use the services of banks or any other intermediary organization to send cryptocurrencies to each other.

Cryptocurrencies, like rials and dollars, are currencies that are created and distributed through different mechanisms. The process of creating some of these currencies, such as bitcoin, is done by mining, and for some others, all the coins are already mined in the network.

cryptocurrencies are built on distributed head office technology, one of the most important products of which is China Blockchain technology. The public blockchain used by most cryptocurrencies provides the ability to view all transactions, both online and offline.

What is Cryptocurrency?

For many, Bitcoin is the first true Cryptocurrency or cryptocurrency, the idea of ​​which was published in Bitcoin White Paper in 2008 and the first coins of which were mined in 2009; However, before Bitcoin, many attempts were made to build a Cryptocurrency.

The idea of ​​cryptocurrencies is rooted in two major problems: “third-party trust” and “double spending”.

When you use banks to transfer and maintain money, you are actually trusting that bank. Even if you look at the whole story, trust is essential to get the most out of your work.

The problem of double spending in financial systems, solved by central servers by checking inventories, prevented people from spending a certain amount of money again. This solution was introduced in a decentralized way in Bitcoin, and everyone could prevent others from cheating by examining the transaction history.

Bitcoin was introduced as the first electronic money that could solve the problem of trust and double spending. People no longer had to trust a person, organization, group or bank to transfer and hold money.

become a major problem for human beings not only in money transfers but also in many other matters. For this reason, the untrustworthy system offered by Bitcoin was used in other human activities.

Gradually, cryptocurrencies emerged to address a variety of concerns. Atrium, for example, introduced itself as a platform for developing various programs and enforcing smart contracts, and Ripple focused on restructuring interbank communications and providing a high-speed, low-cost payment system with an optimistic view of banks.

Today , many tokens are built on the basis of cryptocurrencies such as Atrium, IAS and Theron, which use the power of the original blockchain to execute their transactions.

How do currency codes work?

Currency cryptocurrencies use different models to execute their transactions. Bitcoin, for example, uses a proof-of-work model in which miners or miners approve transactions‌.

These different models in blockchains, known as “consensus algorithms” or collective agreement mechanisms, determine how network participants agree on whether or not to approve a transaction on the network.

(P2P) basis, eliminating the need for intermediaries based on the model used.

The responsibility for monitoring the Cryptocurrency network and ensuring its security is provided by the nodes. Nodes in different networks are selected in different ways. In Bitcoin, for example, there are miners or miners who are in charge, in Ias and Thorne, the selection of these nodes is voted on, and in stock proof networks, anyone who has locked part of their coins in the network as stocks. Can decide on transactions.

What is Cryptocurrency?

How are cryptocurrencies different from regular ?

Some unique features distinguish between cryptocurrencies and regular currencies. Of course, not all of these features are present in all cryptocurrencies, and there are some exceptions.

The first feature of cryptocurrencies is the irreversibility of transactions. If you make a Cryptocurrency transfer and your transaction is confirmed, you will not be able to return it, and this will only be possible if the recipient is willing to do so. But this method is different in banks. If you have mistakenly transferred money to another personal account, you can eventually get it back with legal action. But if you mistakenly send another bitcoin or Cryptocurrency to another address, you should not worry about it!

The second unique feature of cryptocurrencies is that they are anonymous or semi-anonymous. The addresses of wallets that have the same role as the card number or account number in bank accounts do not include your identity information. These addresses, which consist of a series of expressions of letters and numbers, can be linked to the identity of individuals only by examining the history of transactions and in-depth analysis. Of course, some dodgy and privacy-oriented cryptocurrencies, such as Monroe, Zick, and Green, are designed to make identification very difficult and almost impossible.

The third characteristic of cryptocurrencies is that they are universal or cross-border. Sending money to different parts of the world may take several days with current systems, but cryptocurrencies can do this in minutes. cryptocurrencies know no boundaries and can be shipped from anywhere in the world.

The fourth feature is the security of cryptocurrencies. This security in intra-network transactions is provided by hash power shared by individuals (in work proof systems). On the other hand, public key and private key cryptography systems allow people to take control of their own digital currencies and no one else can access them.

The fifth characteristic that distinguishes cryptocurrencies from ordinary currencies is that they are not exclusive. Individuals do not need permission from an individual, group, or organization to be able to use various Cryptocurrency networks, such as Bitcoin, Atrium, Light Coin, and so on. They can download the entire transaction history and send or receive digital currency themselves without permission.

Types of cryptocurrencies

cryptocurrencies other than bitcoins can be divided into two categories: coins and tokens. Each coin or the same coin each has its own blockchain. Some coins are made from the original bitcoin code, or so-called forks of bitcoin. These are created from bitcoin by making minor corrections to variables such as the number of coins, the extraction algorithm, the time it takes to create blocks, and so on.

Some other coins, such as Atrium, Ripple, and View, have built their network without the use of bitcoin codes. These blockchains are often created for more applications than digital money.

Tokens are another class of cryptocurrencies that are built on a platform such as Atrium or View and IAS. They do not have a separate blockchain and use the power of the original blockchain to execute their transactions.

Tokens are awarded to investors during the initial public offering of coins in exchange for crowdfunding. Tokens have their own uses and cannot be seen as a currency. The tokens themselves are divided into two categories: securities tokens and functional tokens.

Popular cryptocurrencies

There are currently more than 2,200 cryptocurrencies on the market, most of which are dead or abandoned projects. Throughout the 10-year history of cryptocurrencies, some of them have maintained their place at the top of the most valuable tables from the very beginning.

Bitcoin

Bitcoin is the most famous and oldest Cryptocurrency that has always been in the spotlight. It has been more than 10 years since the creation of this Cryptocurrency by Satoshi Nakamoto and since then it has not lost its first place among cryptocurrencies.

Ethereum

The idea for Atrium was mooted in 2013 by Vitalik Butrin. The coin was first released in 2014 and its network was launched in July 2015. Atrium came up with innovative ideas from the beginning. The Cryptocurrency of this platform is called ether and Atrium can be used to make tokens.

Ripple (XRP)

Ripple is a text-based platform designed to perform cheap and fast transactions. The payment system was launched in 2012 and supports common currencies in its network. Ripple focuses on partnering with banks and developing its payment system, and its coin is called XRP.

LightCoin

LightCoin was created by Charlie Lee with the goal of making faster payments by modifying bitcoin codes. This Cryptocurrency is known as digital silver and is one of the oldest coins.

Bitcoin Cache

One of the most famous bitcoin forks that was created in 2017 by changing the size of blocks. Bitcoin Cash in 2018 was divided into two chains, ABC and SV, so that the ABC chain continued to operate under the name Bitcoin Cash.

The reason for the popularity of cryptocurrencies

gained popularity due to their volatile market, the technology used in them, and their liberal ideas.

The Cryptocurrency market is highly volatile due to its infancy, and the price of one of them may rise by several hundred percent or fall by several tens of percent in one day.

The technology used in cryptocurrencies, using mathematics-based cryptography, prevents fraud and encourages payment systems to be honest.

In addition, the liberal aspect and the abandonment of intermediaries have led people who were pessimistic about traditional financial systems to turn to cryptocurrencies.

What is Cryptocurrency?