As we increasingly operate via electronic and mobile banking, money has moved from being ‘a thing’ we hold in our hands, to numbers we move around in our smartphones or tablets. In such an environment, it is inevitable that new forms of currency will emerge to challenge the historic norms. And this led to the birth of Cryptocurrencies, such as Bitcoins, Litecoins and Dogecoins among others.
What is cryptocurrency?
Wikipedia Inc. defines
cryptocurrency
"...as a medium of exchange using cryptography to secure the transactions and to control the creation of new units. Cryptocurrencies are a subset of alternative currencies or specifically of digital currencies."
Alternatively, it can also be defined as a name given to a system that uses cryptography to allow the secure transfer and exchange of digital tokens in a distributed and decentralised manner. These tokens can be traded at market rates for fiat currencies.
Features of cryptocurrency
1. Cryptocurrency has a decentralized control, which means they have no central authority, they are distinct from a centralized electronic money system such as Paypal. Instead, they use cryptography to control transactions, increase the supply and prevent fraud.2. Another common feature is that transactions are publicly recorded in a ledger. An example is bitcoin, where all transactions are recorded in the block chain.
Bitcoin: The First Cyrptocurrency
In the evening of January 3, 2009, the first cryptocurrency was created by Satoshi Nakamoto and named the new currency Bitcoin (BTC). It was all bit and no coin. There was no paper, copper, or silver; just a 31-thousand lines of codes and an announcement on the internet. One of Satoshi Nakamoto’s works is the most famous article named “Bitcoin: A Peer-to-Peer Electronic Cash System”. With the publication of this article, Bitcoin as the first cryptocurrency was known more and more widely.During the development of cryptocurrency there are two significant periods. The first period is from 2 May 2013 to 30 September 2013, and the second period is from 1 Oct 2013 to 28 February 2014. Since May 2013, Bitcoin’s price to USD had a rise, and in Oct 2013, Bitcoin’s price began to skyrocket especially after the shutdown of silkroad.com. Silkroad is a online balck market, where merchants are allowed to make deals using Bitcoin. After the shutdown of Silkroad, about 26 000 Bitcoins in worth of 3 200 000 Dollars are confiscated by government, and this let to reduction of the supply of Bitcoin, which causes the increase of Bitcoin’s price. In Dec 2013 Bitcoin’s price reached $1,240 at the peak. In February 2014 $350 million worth of Bitcoins were stolen from Mt.Gox which causes the loss of confidence in Bitcoin and thereafter Bitcoin’s price began to fall continuously. Nowadays, Bitcoin’s price to USD is around $690/BTC. Additionaly, the price of Bitcoin is very volatile or unstable in the second period, some factors or events affect the price of Bitcoin in this period, for example the quick development of altcoins, or people have a new aspect on Bitcion and so on.
Appearance of Altcoins?
Apart from Bitcoin, there are also many other cryptocurrencies which were named altcoin altogether. For example, Namecoin (NMC), the first altcoin was created in April 2011 which was due to form a decentralized DNS to make internet censorship more difficult. And soon in October 2011, Litecoin(LTC) was released and became the first successful cryptocurrency to use scrypt as its hash function rather than SHA-256. Thereafter more and more different kinds of cryptocurrency came into the market such like Peercoin (PPC), Feathercoin (FTC), Novacoin (NVC), Terracoin (TRC) and so on.Still not clear about cryptocurrency, This Video link will guide you even more
