The revolution is already happening – The History Of Cryptocurrency

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The History Of Cryptocurrency

The history of crytpocurrency is actually a fairly short one. Yes, we have had digital currency systems before these cryptocurrencies existed, but they are not the same thing. As we mentioned on our “Cryptocurrency Explained” page, former versions of digital currencies were strictly centralized, whereas these new forms of cryptocurrency, such as Bitcoin and Ethereum, are decentralized in nature.

Now, what is really interesting about cryptocurrencies is that they were never intended to be invented as they are known today. This actually all started with the now infamous Bitcoin and a man named Satoshi Nakamoto. Nakamoto’s goal in the beginning was to create nothing more than an electronic peer to peer cash system. People had for a long time been trying to create some kind of online digital cash system, but had always failed due to the issues with centralization.

Satoshi Nakamoto knew that another attempt at building an online centralized cash system would only result in more failure, so he decided to create a digital cash system that had no centralized authority. And so came the birth of the Bitcoin. Yes, Satoshi Nakamoto invented the Bitcoin, the very first decentralized form of digital cash that had no central governing or controlling body. Bitcoin was to be the property of the entirety of the Bitcoin community.

Nakamoto created Bitcoin back in 2008 and it’s value exploded without question. Back when it was first created, it had a value of little over a single cent. However, the value quickly grew and in late 2009 had already reached $27 for a single Bitcoin. Now, in 2020, a single Bitcoin has a value of over $7,500, so as you can see, the value of this particular cryptocurrency has skyrocketed to monumental levels.

To go back to the creation of Bitcoin, the big problem Nakamoto was facing was to stop double spending, the act of a currency owner spending the same money twice. This control over the spending and the amount of cryptocurrency present in the digital world was previously always controlled by a central authority, hence whey digital currencies were always centralized. It was a way to make sure that double spending did not occur. Nakamoto figured out how to create a digital currency that did not require this central authority. In a decentralized digital currency system, every single user or entity needs to agree on every single account balance and transaction for it to work.

However, Nakamoto was able to create this system of cryptocurrencies, where a complete consensus is required from all parties, and if there is any disagreement between parties, the whole thing breaks down. This might all seem very complicated and nearly impossible to execute, but Nakamoto and his invention of Bitcoin proved this all to be wrong. Bitcoin and other cryptocurrencies demonstrate how there is no need for any kind of central authority to control spending and account balances as long as there is total consensus among all parties involved.

Since Nakamoto revealed his amazing innovation there have been dozens of other decentralized cryptocurrencies released by several parties. Some of the most popular and highly valued cryptocurrencies at this time include Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dash, NEO, NEM, Monero, and many others. Like we said, the history of cryptocurrencies is not a very long one, but it is certainly an interesting and eventful history. Now that cryptocurrencies like Bitcoin have proven their value, their ability to operate in the real world, and have shown that they possess real purchasing power, more and more banks, investment firms, and trading organizations, as well as retailers, have begun to accept them as legit forms of currency and payment. The history of cryptocurrency is still happening as we speak, so stay tuned because there are always more developments to come!

The Cryptocurrency Revolution: A Beginner’s Guide to the Future of Money

Back in the day, people who knew about cryptocurrency were those operating within tech circles. It was very hush hush, operating out of the view of the average person. Fast forward to the present day, and the average Joe will have heard of the phenomenon.

Most people will have heard stories of how if you purchased Bitcoin years ago, how you’d now have millions of pounds worth. You’d literally be loaded! That story seemed to grab the attention of a lot of people around the globe.

The media spotlight sort of paved the way for more and more people to take note and delve a bit deeper into the world of cryptocurrency and its purpose. So, with this guide we want to give you a good understanding of what cryptocurrency is all about.

IN THIS GUIDE YOU’LL LEARN:

  1. What is cryptocurrency
  2. How cryptocurrency works
  3. The advantages of cryptocurrencies
  4. The differences between the top 5 cryptocurrencies
  5. And now… ??

WHAT IS CRYPTOCURRENCY?

Essentially a digital form of cash, cryptocurrency is purely online based and is not like other types of currency such as GBP or USD. With currencies such as the Great British Pound or the United States Dollar, you’ll find that the government backs them. Cryptocurrencies are not government backed; they are supported by their respective networks. So it’s goodbye to those notes and cards in your wallet, and you don’t have to put your faith in the government!

Cryptocurrencies are actually entries into a database that are created with cryptography, made secure through complex mathematics and not people. Validating transactions purposely takes a lot of trial and error, so if you haven’t got much patience, mining won’t be for you. We’ll find out more about mining later in the article.

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Cryptocurrency databases are shared over a network, and it’s this network that prevents errors occurring. These errors can be things such as double spending (sending the same payment token to two different people), and nobody wants to do that. The entries in the database can only be altered through specific conditions being fulfilled.

There is no central authority or a central server that governs the cryptocurrency, approving and disproving transactions. The cryptocurrencies are created by the network, and the way they are generated is generally unique to each network and cryptocurrency type. Different types of cryptocurrency are not equal and not interchangeable.

Did You Know? A man from Wales threw away his old hard drive that was believed to contain around $4 million dollars’ worth of Bitcoins?

HOW DOES CRYPTOCURRENCY WORK?

So, we know that cryptocurrency is a digital form of cash that is decentralized, but how does it work? Well, the currency is transferred over a network. When it is transferred, it is confirmed on a public database through a process called mining. Different cryptocurrencies have different mining processes.

Mining is basically the process involved when confirming a transaction. For the entry to be added to the database, the miner has to solve a sort of mathematical puzzle, usually a very complex one. Anyone can be a miner as it is open source but does require a lot of computer power. The miner who solves the mathematical puzzle first adds a block on entries to the database. These entries cannot be made by anyone at any time or altered, that is the purpose of mining. Once the miner has completed the task, they will receive a fee and also newly created coins too for their work. Everyone will know that they have sealed off the block too, so it’s a moment in the spotlight situation.

What Is A Blockchain?

Blockchain technology was actually created by the founder of Bitcoin, Satoshi Nakamoto. It is a way that allows transactions to be stored in a public database; it’s basically a back history of transactions that have ever taken place. You could even look at the blocks that make up the blockchain like individual bank statements.

The database that updates in real time is stored and shared by the people connected to the network, or nodes, as they are commonly known as. It’s basically like a public database that has been shared thousands of times over a network, but the great thing is, it constantly stays up to date, for anyone with access to it. Those pesky hackers can’t get to work on the database either as it is stored in multiple locations, not just the typical centralized one.

Miners work on blockchains, looking to keep everything running smoothly. When a block is created they take the original information, and after applying a bit of brain power to a sort of mathematical formula, they are left with what is known as a hash. The hash seals off and secures the block. It confirms the transactions are legitimate.

It’s a sort of competition for miners. They are competing against rival miners to be able to seal off and secure a block.

The transactions that are made are always between two digital wallets where the cryptocurrencies are held. The transactions are sent to the database and are then confirmed through the mining process. Some cryptocurrency transactions take around 10-15 minutes to complete. A cryptographic signature (electronic signature) is used by digital wallets to provide evidence that the owner of the wallet is the one who is sending the payment and not an intruder.

The database takes care of performing checks such as checking whether the digital wallets in use can calculate balances accurately. They also confirm that the person spending actually owns the coins involved in the transactions. When it comes to anything of value, people want peace of mind after all.

The value of cryptocurrency can fluctuate, much like traditional currencies, due to the demand for them and also if there is a shortage.

The identities of the coin owners are always encrypted, with the person having complete control over it. They are the only one to know their personal key, thus giving them sole control over their account.

Did You Know? May 22 nd is known as Bitcoin Pizza Day! A programmer paid a Bitcoin user 10,000 bitcoins for two Papa John’s pizzas on this day in 2020. Check the current price →

THE ADVANTAGES OF USING CRYPTOCURRENCIES

First of all, as the money is digital, it cannot be forged or counterfeited. Payments cannot be reversed either like credit card chargebacks can. Once the transaction is complete, it is set in stone.

With the miners receiving payment for their work from the actual network, there aren’t usually transaction fees to worry about. There is no cryptocurrency transaction fee. Some people will use a third party service to help maintain their digital wallet. They are likely to charge for their services, very much in the same way that PayPal does.

With regular currencies and through the use of credit and debit cards around the world, you are often at risk of having your identity stolen. You input your credit card details or put it into a machine, and the payment is then requested by the merchant. Cryptocurrency transactions operate differently though. The owner chooses the amount to send, not the merchant. Identities are encrypted too during transactions.

If you have access to the internet, you have access to the use of cryptocurrency. With there being over 3 billion people around the world who have access to the internet, that ultimately means cryptocurrency is available for a huge number of individuals.

The main advantage of cryptocurrency is that you own the account and have full control over it. Nobody else. Every other digital cash system around the world can be controlled by other people. Your private key and the public key that make up your cryptocurrency is yours and yours only. Only you can access and control it.

Did You Know? The FBI owns 15 per cent of the world’s Bitcoins.

5 OF THE WORLD’S TOP CRYPTOCURRENCIES

1. Bitcoin
Bitcoin is the original cryptocurrency and still the most valuable on the market today. It is the market leader due to its established reputation worldwide, its security and the huge community base powering it. Bitcoin holds significant value and has received media attention around the world. Retailers such as Amazon have started to accept Bitcoin by allowing consumers to purchase gift cards with the cryptocurrency.

2. Ethereum
Ether is seen as a sort of token, a fuel as described on their website that is used to pay for computation. It is not intended to be used as a form of currency. Ethereum differs from Bitcoin in the sense that it is completely programmable. The platform allows developers to build and activate applications within the blockchain technology. Miners work to earn Ether rather than mine for Bitcoin.

3. Litecoin
Litecoin is another popular cryptocurrency, often known as LTC, which operates on a peer-to-peer network. Many believe Litecoin to be a direct competitor to Bitcoin as the way it works is very similar. The currency operates on a blockchain and mining takes place to verify transactions and to provide security.

4. Neo
NEO is the first decentralized, open-source cryptocurrency and blockchain platform launched in China.
NEO is mixing Blockchain technology and digital identity to “digitize assets”. NEO provides a framework for the digitalization of real world assets and is set on the goal of making it accessible to everyone.

5. Monero
Monero is a secure, private and untraceable currency system. Monero uses a special kind of cryptography to ensure that all of its transactions remain 100% unlinkable and untraceable. In an increasingly transparent world, you can see why something like Monero can become so desirable.

Did You Know? A journalist was once given a Bitcoin live on TV back in 2020. It was quickly stolen from him by a viewer. Lesson learned: do never expose your private key.

WHERE TO START

Cryptocurrency is one of the fastest growing technologies on the planet and it’s incredible ability to disrupt the monopolisation of the international banking system will make it one of the most controversial topics of our time. Now that you’ve a bit of a better understanding of what’s cryptocurrency all about, you may want to learn more about some of the specific currencies or get started by buying some.

If you want to go into depth on the technical specifics, I really recommend reading some of the whitepapers. For example those of Bitcoin and Ethereum. Read a full collection of white papers in this ‘Learn More‘ collection.

Did you get excited about cryptocurrency and have you always wanted to buy some? Coinbase is a good starter exchange. You can get $10 worth of free Bitcoin using our referral with this link. It’s a good place for cryptocurrency beginners to make their first purchase, however as you learn the ropes I’d highly recommend Binance and Gdax moving forward. Check this exchanges collection for a full list.

Thanks for reading. Want to get an update when new cryptocurrency guides are released? Then please subscribe to Cryptominded’s newsletter.

If you’ve any feedback or links to add to the guide, let us know below.

How to prepare for the cryptocurrency revolution

Blockchain is quickly becoming one of the most anticipated technologies of our time. Much like the early internet, experienced technologists foresee blockchain as a vehicle to drive society forward. Implementations of secure, decentralized systems can empower us to conquer organizational issues of trust and security that have plagued our society for generations. In effect, we can fundamentally disrupt industries core to our economies and social structure, eliminating inefficiency and human error.

One of the most exciting and imminent applications of blockchain is with Bitcoin. Though volatile in nature, Bitcoin represents a not so far away future where payments are secure, data-driven, and digital.

Yet, with all the hype and promise surrounding cryptocurrencies, there is still tons of confusion around how exactly to prepare for this revolution. There are many self-proclaimed “crypto experts,” as well as fraudulent scammers, who are leveraging the excitement in the space as a means for profit.

Navigating the short term noise in the community can be risk and challenging. Though, if you believe in the long term significance of the technology, then it is well worth the upfront financial and resource investment to familiarize and educate yourself in the space.

Here are four ways to ensure you are prepared for the incoming cryptocurrency revolution:

1. Do your own research

Like any other time you are thinking about making an investment, it is best to start with your own research so that you can form your own, unbiased thesis. Especially in a nascent space, like with blockchain, it can be really easy to be inadvertently influenced by others trying to sell you on their own ideas or projects.

Whether you end up analyzing whitepapers or educating yourself on the backend technology, it is important you always investigate who the author is behind the scenes. Everyone has a bias, and while it is not always bad, it is very important you make a mental note of it. It is very easy to get scammed out of a significant amount of capital, when your investment is primarily backed in trust of an individual you have no real strong relationship with.

Especially with initial coin offerings, it can be very easy to get sucked into the romantic future vision without seeing true, technical implementation. Look for the details!

2. Familiarize yourself with the platforms

Given the promising returns of many cryptocurrencies, it can be easy to think that “going all in” early is the best decision. First remember that these returns are generated by extremely risky securities that are volatile in nature. Secondly, there are also many nuances and subtleties, unique to crypto investing, that are worth familiarizing yourself with before throwing any money away. There are many different platforms designed to help you trade and store cryptocurrencies.

Here is a list of the best Bitcoin wallets , specifically, that you can leverage to securely and safely store your coins. Depending on the frequency you plan to trade as well as how much money you intend to hold will often dictate which wallet you end up going with. As it is early on, relatively, in the world of cryptocurrency, chances are we will continue to see new platforms come out and evolve as the technology becomes more mainstream.

3. Start conversations with peers

One of the best investments you can make in the long term value of cryptocurrency, outside of physically risking cash to invest in the platform, is to find a strong community you can rely on to talk about recent cryptocurrency news and developments. Unlike other fledgling technologies first coming out, the crypto world is vibrantly filled with a mix of engineers, designers, marketers, and writers. Chances are, there is a niche group of crypto-enthusiasts who share your views, waiting for more members.

But above the relationships you can form, there is also a ton to learn. And finding a community of people you can trust will only become more and more important as the masses gain access to and begin to see the true potential of the platform.

4. Get the resources for your business

If you are a business owner, realize that the world of payments is likely to change dramatically over the next 5, 10, 20 years. Specifically, the process of charging and collecting for your services will be completely different, rooted in the advancement of digital currencies, like Bitcoin.

Luckily, there are different vendors in the space who are helping businesses, big and small, begin to accept alternative forms of currency. As products like virtual credit cards and cryptocurrency wallets become more common among consumers, businesses will need to be able to support this method of payment. In this world, where we are no longer bound to the value of cash or worry about carrying around a bunch of different credit cards, consumers will be able to shop more freely, which is better for all parties.

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