Why Cryptocurrency is here to stay
Recently, the cryptocurrency market has risen dramatically. With Bitcoin leading the pack and coins like Ethereum and Dogecoin creating their own paths, cryptocurrency has truly blown up. But is it here to stay? In short, yes. Let’s delve into why.
What is a cryptocurrency?
Let’s start with the big question, what is a cryptocurrency? A cryptocurrency is a digital currency built on blockchain technology. Basically, cryptocurrency is decentralized. Decentralized means that there is no central authority controlling the currency. Here’s an example: Rob wants to send $50 to Jessica. Rob has $1000 in his bank account. The bank moves $50 dollars from his account to Jessica’s account. Easy enough, right? The issue with this is that the bank has too much power. This also means that if the banks crash, everyone’s money is gone. This is what happened in the recession of 2008. That’s when the creator of Bitcoin, pseudonymously called Satoshi Nakamoto, saw the need for a decentralized currency. He amalgamated already created concepts such as blockchain and proof of work, and created the first cryptocurrency, Bitcoin. Bitcoin is transferred straight from one person to the other, without the need for a central authority, therefore making decentralized. However, the issue with no central authority on digital currencies is that there is no security. Rob could easily duplicate his $1000 over and over again because the currency is just a file on his computer. He can duplicate it as many times as he wants! This is where blockchain and proof of work come into play.
What is blockchain?
Blockchain is an alternate storage system which basically consists of different “blocks” chained together. Each block has some data stored in it. It could be text, images, or anything else. Each block also has some other things automatically written in to it. The first thing is the index, the block’s place on the chain, such as the 45th block. Second is the timestamp. Next, there is the hash of the previous block. In our case, there is also the “nonce” and the transactions stored in the block. I won’t get into detail of these concepts in this article, however. Using proof of work, which is a system I will explain in a later article, these blocks are verified to have good transactions in them.
How is security enforced in blockchain?
First of all, blockchains are immutable, meaning that they cannot be changed, The reason for this is the p2p network, or peer-to-peer network. The p2p network is a large network of separate computer, or nodes, that each have a copy of the blockchain. If one node has a different copy of the blockchain than the other, then that node gets fixed. Therefore, no one node can change the blockchain.
Conclusion
So, why is cryptocurrency so popular? The reason is how versatile it is. Cryptocurrency, along with being an extremely secure method of payment, can also be used in other places called Dapps. Dapp stands for decentralized applications, which run on cryptocurrency. This opens the field for a variety of different uses, all of which slowly cement the idea that cryptocurrency will stay. As the world starts to trust cryptocurrency, fiat(regular) money will slowly be run off the road, with cryptocurrency becoming the new norm.
“Our content is intended to be used and must be used for information and education purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on my blog and wish to rely upon, whether for the purpose of making an investment decision or otherwise.”
