A cryptocurrency is a type of digital money created from code. They function autonomously, outside of traditional banking and government systems. The cryptocurrency market is constantly expanding and provides many opportunities for informed online traders. Cryptocurrencies use cryptography to secure transactions and regulate the creation of additional units Bitcoin is the original and by far most well-known cryptocurrency, was launched in January 2009. Today there are over 1,000 cryptocurrencies available online.
Key features of cryptocurrencies
There are several key principles that govern cryptocurrency use, exchange and transactions.
Blockchain technology
A blockchain is a decentralized, public ledger or list of a cryptocurrency’s transactions. Completed blocks, comprised of the latest transactions, are recorded and added to the blockchain. They are stored in chronological order as an open, permanent and verifiable record. A peer-to-peer network of market participants manages blockchains, and they follow a set protocol for validating new blocks. Each ‘node’ or computer connected to the network automatically downloads a copy of the blockchain. This allows everyone to track transactions without the need for central record-keeping.
Blockchain technology creates a record that can’t be changed without the agreement of the rest of the network. The blockchain concept is attributed to bitcoin’s founder, Satoshi Nakamoto. This concept has been the inspiration for other applications beyond digital cash and currency.
Crypto mining
Bitcoin and other cryptocurrencies can best be described as potential currencies. The potential uses of the blockchain technology behind cryptocurrencies are also a matter of interest. This technology may be be adopted for other purposes, including legal transactions, security programs and voting systems.