Bitcoin & Cryptocurrency – Concepts and Facts
Cryptocurrency is a digital form of currency that can be used as a means of payment for goods and services. It uses cryptographic technology (blockchain) to mask and anonymize transactions, mines and the transfer of assets between different parties. It provides an alternative to the currently centralized currencies that are heavily dependent on any financial institution or government that has been burdened with transaction costs, reversibility, and fraud. Cryptocurrencies are fiat, which means they are ones with no intrinsic value that is designated as money, often by government regulation. They have assigned value to Bitcoin Trader only because the government uses its power to enforce the value of a fiat currency, or because the exchange parties agree on its value. That means, that the value of a fiat currency is determined by the company that supports it or by the agreement of the exchange parties. For cryptocurrencies, the secured entity is blockchain technology.
Bitcoin was the first cryptocurrency, but since its inception and growth, there have been over 1700 other alternative cryptocurrencies that have been established and are in circulation today. There are many more creations and consolidations of cryptocurrencies. Some of the main (well-established) coins remain while other new coins gain popularity and are considered strong alternatives. A good example of this is Bitcoin and Ethereum.
The evolution of cryptocurrency has been from an academic experimentation/research paper to an alternative financial instrument for currency arbitrage. The future of cryptocurrency is relatively unknown, but some speculate two possible directions. One way is an alternative form of payment. More and more retailers are starting to accept cryptocurrency as a means of payment, and companies (good and bad) new to fraudulent checks around the world are starting to use cryptocurrency as an anonymous way to establish a platform or do business functions without the oversight or regulation of governments perform.
Below are some other useful concepts related to cryptocurrency that are useful to know.
Bitcoin and cryptocurrency
Bitcoin is the original cryptocurrency. It started as a research paper published in 2008 by an unknown person or group named Santoshi Nakamoto. The paper was entitled Bitcoin: A Peer-to-Peer Electronic Cash System. A peer-to-peer version of electronic cash was described that would allow online payments to be sent directly from one party to another without a financial institution. In other words, an alternative to the currently centralized currencies relied heavily on any financial institution or government burdened with transaction costs, reversibility, and fraud. The paper went on to define blockchain technology, how transactions would work, mines, and privacy. In 2009, the source code for Bitcoin was uploaded to SourceForge and some early supporters picked it up and started using it. These are the first bitcoins to be mined.