Cryptocurrency

Cryptocurrencies are digital currencies. They can be used just like any other normal currency, however, they exist outside the control government and financial institutions. Even though their legitimacy as a form of payment is based on value, Cryptocurrencies are treated as commodities like gold rather than forex. Like commodities, the value of a cryptocurrency isn’t tied exclusively to the performance of an economy, and they are only valuable because people agree they will retain their value when converted back to regular currencies. Therefore, they are principally treated as a commodity, an investment whose return comes from speculation of fluctuating value. Types of cryptocurrencies include bitcoin, bitcoin cash, ether, litecoin, ripple and dash.

Cryptocurrency mining is the process by which recent Cryptocurrency transactions are verified, and new units are released. The goal of miners is to assemble recent transactions into ‘blocks’ (a group of verified transactions) and find a solution to a complex algorithm. After doing this you can earn a “block reward”, or a set amount of Cryptocurrency. Finding solutions to these algorithms is an ongoing process, and depends on the result of previous algorithms in order to make the next calculation. The difficulty of the algorithm is regularly adjusted, with the goal of keeping block discover constant, thus the name ‘mining’.

Blockchain is a shared digital registry which records all the transactions of a certain Cryptocurrency between two parties. Cryptocurrency blocks are then cryptographically secured, and linked to each other. The data recorded on the Blockchain is hosted by millions of computers and is open to all, rather than stored in a central location. This makes it both transparent and invulnerable to alteration, therefore no single weak point is open to humans, or software error. Once the data is checked, it cannot be later edited without the computing power or network majority. One thing to note is that Cryptocurrency is just one example of smart applications that use Blockchain technology.