Believe it or not, cryptocurrency is an active avalanche growing in size, with the potential to take over fiat money in the near future. If you want to stay ahead of the events and know your ground, you should know the basics of how cryptocurrency works and what can you do with it.
In this article, you will find:
- What is the meaning of the term ‘cryptocurrency’?
- What historical events relate to the birth of the digital currency?
- Possible applications of cryptocurrency in the real world.
Cryptocurrency Explained: Meaning and Historical Facts
A “cryptocurrency” is a collective term describing all types of digital or virtual currency (digital money) that lack the physical representation of coins or banknotes but still, work as a medium of trade exchange. Cryptocurrency uses sturdy cryptography puzzles to secure all transactions made with the currency and prevent counterfeit, such as double-spending or manipulation.
One of the most proclaimed features of the digital money is that it is not issued by a central authority (decentralized) and is immune to political interference or tampering by the government. Simply put, cryptocurrency represents a specific number of entries written in a database that can hardly be changed by anyone alone, unless he takes down the whole database.
The Birth of Cryptocurrency
In 2009, an unknown individual or group of programmers, under the name of Satoshi Nakamoto, officially announced the first cryptocurrency ever to appear – Bitcoin – as “A Peer-to-Peer Electronic Cash System.”
An interesting fact is that the mysterious Satoshi Nakamoto was not the first to attempt the creation of digital currency. Experiments date way back (mostly around the 90s) and remind of projects like DigiCash. Unfortunately, all of them failed to accomplish their mission due to various reasons.
Nevertheless, the milestone was achieved in 2009 and proved to work in 2010 when the first ever real-world cryptocurrency purchase was made by Laszlo Hanyecz – the Bitcoin pizza guy who exchanged 10,000 Bitcoins for two pizzas. Hanyecz agreed with another user to transfer him the number of tokens if he orders a meal for him, which he did. That transaction set the stone for the future of all cryptocurrencies on May 22.
How Cryptocurrency Works and What Applications Does It Have?
Cryptocurrencies offer multiple application choices, but before we reach to them, first you should understand how cryptocurrency operates.
- To exist, cryptocurrencies require a created network and a group of peers with different computers on it.
- Users on the network are eligible to request transactions, and whenever someone does, the operation is broadcasted to the P2P network, consisting of different nodes (computers).
- From there on, the network of nodes validates the transaction and the user’s status by confirming the operation through known algorithms.
- Once verified, the transaction is combined with other transactions to create a new block of data for the ledger. A validated transaction can involve not only cryptocurrency but also contracts, records or other information.
- The next step is that the created block is added to the existing blockchain and becomes permanent and unforgeable.
- The final result: Transaction completed.
The overall process looks simple. However, the transactional perks of cryptocurrencies (irreversible, anonymous, secure, fast and global properties), along with the monetary perks (controlled supply) disclose a range of application that involves:
- Buying goods;
- Mining for profit;
- A form of payment to businesses.
Bear in mind – these are merely the ones available today.
The safety features and the fast speed of transactions have allowed cryptocurrencies to change multiple industries already, including charity organizations and their fundraising activities, digital entertainment companies, funds transfers/lending services, esports, and gambling, amongst others.
Can you imagine what’s to come in the next five years?
ABOUT CRYPTOKEN MEDIA
If you wish to join the digital transformation and revolution in the financial industry and you have creative and innovative ideas that you want to run through cryptocurrency, our team at Cryptoken Media can help you to achieve your goal through the organization of ICO campaigns and project crowdfunding.
Cryptoken Media is a marketing agency specializing in organizing ICOs and other crypto related events. We aim to ensure the success of our customers, by organizing highly effective marketing campaigns to build their favorable reputation, attract a loyal customer base and, of course, raise the funds needed for their real projects.
If you are ready to jump into this fast-growing industry and you are thinking about starting an ICO, we can help you through the process of getting your name on the map.
Our expert team at Cryptoken Media will help your brand by organizing a smart and highly effective marketing campaign, employing a wide variety of marketing strategies and advertisement.