What is Cryptocurrency? Cryptocurrency for Beginners Cryptocurrency Explained

 What is Cryptocurrency? Cryptocurrency for Beginners Cryptocurrency Explained  

This "Cryptocurrency Explained" article will help you understand what is a cryptocurrency, how paper money came into existence, the future of cryptocurrency, the features of cryptocurrency, how cryptocurrency works, what makes cryptocurrencies special, what is 'crypto' in cryptocurrency and you will also see a comparison between bitcoin and ether. So, let's deep dive into this Cryptocurrency for beginners video to understand how cryptocurrency works. ▪ imagine you're having a conversation with your friends. Now at some point in this conversation, someone's going to bring up cryptocurrencies. Cryptocurrencies are something that everyone wants to talk about, but no one knows how they work. So today I'm going to fix that. I'm rattled from simply learning and this is Cryptocurrency explained. Since man was involved currency has been a very important part of our lives in the cave manner. They used the barter system. The barter system involves goods and services being exchanged among each other. 

So now we have a situation where a caveman is exchanging seven apples and getting oranges in return. Not the barter system fell out of use because it had some glaring flaws. Now, these flaws include having people's requirements coincide, for example, say you have five apples and your friend has five oranges, you want some of his oranges now until and unless your friend requires the apples that you own, he'll not be ready to make an exchange for it. There's no common measure of value since there is no common measure in terms of which the value of a commodity can be expressed. There is a problem when you have to decide how many apples you're ready to trade for one orange or a mango. Not all goods can be divided or subdivided.

 For example, you can divide a live annual into different smaller units. The goods cannot be transported easily. Now, unlike how modern currency fits in your wallet or your mobile phone, the goods that you own cannot be taken with you everywhere you go after realizing that the barter system didn't work very well, the currency went through a few iterations in 110 B. C.And officially currency was minted in 1000 to 50 80 gold plated Florence was introduced and this was used across Europe and from 16 82 1980 paper currency gained widespread popularity and was used across the world. This is how modern currency as we know it came into existence. 

Modern currency included paper currency and coins, credit cards, and digital wallets. For example, you have Apple pay amazon, pay to Paypal, and so on. All of this was controlled by banks and governments. Now this means that there was a centralized regulatory authority that limited how paper currency and credit cards worked. Now imagine the scenario of doing an online transaction. You're thanking your friend for paying for your lunch and you're saying that you're sending them money to their account. Now, this transaction takes place successfully. But there are several ways where this could have gone wrong. There could have been a technical issue at the bank. For example, the systems could have been down the machines weren't working properly, and so on. 

That means there's a central point of failure which is the bank. The user's accounts could have gotten hacked for example there could have been a DDoS attack or identity theft and so on or the transfer limits for that account were exceeded. This is why the future of currency lies with Cryptocurrency now imagine the transaction between two people in the future. One of them has the Bitcoin app and there's a notification asking whether they're sure they're ready to transfer five Bitcoins. If yes processing takes place here we're authenticating the user's identity, checking whether they have the required balance to make that transaction, and other things after that's done the payment is transferred and the payment is received. All of this happens in a matter of minutes and is as simple as that. This in turn Removes all the problems of modern banking. 

There are no limits to the funds you can transfer. Your accounts cannot be hacked and there's no central point of failure. Now as of 2018 there are more than 1600 cryptocurrencies available now there are some popular ones like Bitcoin light coin. It's very um and get cash and new Cryptocurrency crops up every single day now considering how much growth they're having at the moment there's a good chance there's plenty more to come in the upcoming years. So what exactly is Cryptocurrency? Cryptocurrency is a digital or virtual currency that is meant to be a medium of exchange

 mbodiment. It also uses cryptography to work the way it does now some of the features of Cryptocurrency aCryptocurrency is quite similar to real-world currency just that it does not have any physical end that there's a limit to how many units can exist with Bitcoin. This limit exists that 21 million after this no more. Bitcoins will be produced. You can easily verify the transfer of funds. Now the hashing algorithms that Bitcoin uses make it very easy for users to determine whether a transaction is valid or not. They operate independently of a bank or a central authority. They work in a decentralized manner

. Now new units can be added only after certain conditions are met. For example, Bitcoin only after a block has been added to the Blockchain. Will the minor be rewarded with Bitcoins this is the only way new Bitcoins can be generated? So what makes Cryptocurrency so special firstly there are little to no transaction costs. Now if you use a digital wallet you'll know that if you're transferring money from your wallet to your bank account, you lose some amount of money. You have 24 7 access to money. You can't just walk up to your bank at three a.m. In the morning and say that you want to withdraw some money. There are no limits on purchases and withdrawals. There's freedom for anyone to use. For example, if you're setting up an account in your bank you need to do some amount of paperwork and documentation with cryptocurrencies. All of that can be avoided. International transactions are faster.

 The wire transfers about half a day to transfer money from one place to another. But with cryptocurrencies it only takes a matter of minutes or seconds, what's the crypto in cryptocurrencies? Crypto refers to cryptography it's a method of using encryption and decryption to secure communication in the presence of third parties with ill intent. Now this refers to third parties who want to steal your data or want to eavesdrop on your conversation. Cryptography uses computational algorithms like 2 56 which is the hashing algorithm that Bitcoin uses a pub key which is like a digital identity of the user that he shares with everyone and a private key which is the digital signature of the user which he keeps hidden. Now let's talk about a normal Bitcoin transaction. First, you have the transaction areas, these details who you want to send it to and how many Bitcoins you want to send them. Then it's passed through a hashing algorithm. For Bitcoin, we use the S. C. K. To 56 algorithm.

 The output that you obtain is passed through a signature algorithm with the user's private key. Now, this is used to uniquely identify the user. This output is then distributed across the network. For people to verify this is done by using the sender's public key. The people who verify the transaction to check whether it's valid or not are known as miners. Now after this is done the transaction and several others are added to the Blockchain where it cannot be changed again. If the concepts of hashing seem a little difficult to you. I would suggest you click on the top right corner and watch the Blockchain explain video so that you can understand better. Now the 2 56 algorithm, like I told you earlier, looks something like this, ▪ seeing how complicated it looks. I'm sure it's safe to say that encryption is very difficult to hack. Today we'll be focusing on two major cryptocurrencies. Bitcoin and ether Bitcoin is a digital currency that is decentralized and works on the Blockchain technology it uses appears to be a network to perform transactions.

 Let's talk about ether is a currency that's accepted in the Ethereum network. The Ethereum network uses Blockchain technology to create an open-source platform for building and deploying decentralized applications. Now, let's talk about the similarities between Bitcoin and ether. They're the biggest and most valuable cryptocurrencies in the market right now, both of them use Blockchain technology which is nothing but a technology that involves transactions being added to a container called a block and creating a chain of blocks in which data cannot be altered currency in mind using a method called proof of work, which is a form of mathematical puzzle that needs to be solved before a block can be added to the Blockchain. Finally, these are widely used across the world. Now let's talk about the differences with Bitcoin. It is used to send money to someone.

 This is very similar to how real-life currency works either. It is used as a currency within the Ethereum network, although it can be used for real-life transactions as well. Bitcoin transactions are manual, which means you have to personally perform these transactions either you have the option to make these transactions manual or automatic, or programmable, which means that these transactions will take place when a certain condition has been met. For Bitcoin, it takes 10 minutes to perform a transaction, which is the amount of time it takes for a block to be added to the Blockchain with either, it takes about 20 seconds to do a transaction. 

No Blockchain is used like money for real-world transactions and ether is used to power the Ethereum network and power real-life transactions as well. Ether is used as a fuel within the Ethereum network to power both of these things. Now there's a limit to how many Bitcoins can exist, which is 21 million were supposed to hit this number by the year 21 40 ether is expected to be around for a while but not to exceed 100 million units. A Bitcoin is used for transactions involving goods and services and ether uses Blockchain technology to create a ledger to trigger a transaction when a certain condition is met for Bitcoin. We used an algorithm called a 2 56 for hashing and with Ethereum, we use 80 hash as of July 23rd 18 2001. Bitcoin equals $7668 for either. It costs $464. Now. 

what's the future of cryptocurrencies? The whole world is divided when it comes to cryptocurrencies. On one side, you have supporters like Bill Gates, Al Gore, and Richard Branson who say that cryptocurrencies are better than regular currencies. On the other side, we have people who are completely against it. People like Warren Buffet, Paul Krugman, and Richard Schiller are both Nobel prize winners in the field of economics. They call it upon Scheme and means for criminal activities in the future. There's going to be a conflict between regulation and anonymity. Since several cryptocurrencies have been linked with terrorist attacks, governments would want to regulate how cryptocurrencies would work. On the other hand, the main emphasis of cryptocurrencies is to ensure that their users are kept anonymous.