Every man and his dog is talking about it. But what is cryptocurrency?
In an age where even the fridge is going digital physical cash is losing it’s relevance. Credit cards and online purchases make up the majority of transactions but the physical funds still need to exist somewhere, either at the bank or maybe like my Grandmother in a shoe box in the laundry. Enter Cryptocurrencies. Utilising the blockchain which I explain below, the currency allows for financial and asset transfers e.g real estate, cars etc to be done instantly with minimal fees and no third party interference. The crypto part refers to the fact transactions are encrypted, making the technology incredibly secure and difficult to tamper with. A key factor to the success of cryptocurrencies is a process you may be familiar with called mining. Mining is basically an exchange where “miners” verify transaction details and add blocks to the blockchain in exchange for payment in the form of the mined cryptocurrency. This process allows for the data to be decentralised and incredibly difficult to steal or corrupt.
From Humble Beginnings
Cryptocurrencies unlike how they came into public spotlight didn’t just happen overnight. The road Cryptos have travelled down is long and winding and our purpose is making money not reading biographies, so let’s try to keep this short. The ideas behind virtual currency were spawned by the invention of credit payments, the eventual use in everyday transactions and online payment systems like paypal. This takes us to the late 90’s – 00’s when Cryptocurrencies started popping up in the cryptography community (hackers and coders e,g Julian Assange and the guy who made Tor). The early cryptos never managed to gain much traction in the public consciousness until in 2008 a coin you might have heard of known as Bitcoin was introduced via an article written by creator Satoshi Nakamoto.
Over the years Bitcoin has continued to grow, giving rise to hundreds of smaller cryptocurrencies known as altcoins. Some of these are mere copies whilst others hold much greater visions to harness the power of the underlying blockchain technology. The reason this technology is so exciting is because when done properly it makes your cryptocurrency secure beyond measure. This is where the blockchain comes in.
What is “The Blockchain”
I thought you’d never ask. The blockchain my friends it what makes cryptocurrencies such an exciting prospect. The bad news is it’s very early days and the market is a grumpy toddler prone to dummy spits. The good news is it’s early days and you’ve found Insider Chaining. In a nutshell the blockchain is an entire history of transactions made on a certain cryptocurrency. The blockchain is the backbone of cryptocurrencies is and is a crucial part of gaining an initial understanding.
Say you want to make a purchase using bitcoin, a transaction is created. This transaction contains the wallet address of the sender, the wallet address of the recipient and the amount of currency sent. These details are sent to an unverified block. Once added the details are said to be unchangeable.
After a block is filled with the maximum transactions it is mined and added to the blockchain with every other block ever recorded for the specific cryptocurrency containing the entire transaction of history of said currency. All block’s are given an identifier linking them to the previous and cementing there place in the chain.
Now you know
Ok friends, that raps up a basic crash course in Cryptocurrency and Blockchains. Now you are ready to start setting up your wallets and getting in on the fun.