We may earn money or products from the companies mentioned in this post.
Bitcoin, the world’s most famous cryptocurrency, has been all over the news recently. Just as you wake up to hear the morning news and the reported stock activity it has become the norm to report the wild up and down swings of the cryptocurrency market alongside it. We are told it is the digital currency of the future, and crypto millionaires seem to be popping up all, over furthering the hype of the cryptocurrency craze even more. But what is this new currency exactly? You can’t hold it, you can’t see it, and you can’t even really understand how it works without a detailed explanation. Let’s dig into the workings of cryptocurrency.
How does Crypto Work and What is it Exactly?
Probably the most important questions to answer are how bitcoin and other cryptocurrencies actually function. There is one word to sum it all up really and that is blockchain. This is what is at the heart of all crypto currencies and makes them tick, it really gives them value to even be a currency. Blockchain is essentially the ability to keep a distributed ledger across multiple computers and networks. A ledger which is a record of the history of that blockchain data or cryptocurrency in this case has been. You might think, well someone can edit that and just lie about the location, but it is virtually impossible to do because with each change or transaction in the data a cryptographic hash is made that is unchangeable to the ledger portion of that blockchain data.
The ledger keeps a trail going all the way back to its original destination and validating its legitimacy and making it unique to where it can not be duplicated. Put this together and apply it to bitcoin or other cryptocurrencies and you have a currency that is dependable and trustworthy with value and scarcity since the amount of the currency can be limited. All the makings of a good monetary system. The special thing about crypto and blockchain that sets it apart from government made currencies is that it is truly decentralized and not managed like the dollar is with inflation or supply. This excites many enthusiasts and onlookers at the idea of a truly free currency, which also has complete public transparency.
Origins of the Bitcoin
The birth story of crypto and blockchain technology is an interesting one and really not all that long ago in the scope of history did it come to be. In the year 2008 an anonymous person, who called themselves Satoshi Nakamoto, posted a paper called Bitcoin-A Peer to Peer Electronic Cash System to a mailing list where the idea was publicized and thus was the mysterious beginning of bitcoin. Even today no one knows the identity of Satoshi Nakamoto. Just after that bitcoin was made public in 2009 and the journey for crypto and bitcoin begins for buyers, sellers, and miners alike.
The issue with this technology being so new is trust. Using something as a currency requires at its core trust and consistency. When dealing with something most people do not even understand. Crypto and bitcoin alike have a long way to go before mass adoption if that is at all possible, only time will tell. Over the years people have bought into it as an investment venture and become very wealthy thus driving cryptocurrencies to more adoption and the added rivals digitally minted along the way. The demand is a good sign for its future however, and as time goes on and a clear winner or winners of cryptocurrencies emerge, we may have a more solid adoption of them in our society. We will have to wait and see.