Cryptocurrency as a digital asset

What is cryptocurrency?

This blog post will help you to get some initial knowledge about cryptocurrency. Simply put, cryptocurrency is a digital currency, fully connected with the internet that uses high security technology call cryptography.

It is totally different from normal currency. Cryptocurrency is going to populate high and is a very disruptive technology. The purpose of this is same as in normal currency. It’s using as a medium of exchange. But cryptocurrency was developed to exchange digital information.

These exchange processes were made possible by certain principles of cryptography. The history of cryptography was born during the second world war era, because of the need for secure communication. But the world had to wait until 2009 to see the first release of a fully decentralized digital cash system named Bitcoin. The creator of Bitcoin is Satoshi Nakamoto and people don’t know who he really is. He is still an unknown. And as of right now, The value of a bitcoin is equals 683,776 Sri Lankan Rupee (Jan 2019).

Cryptocurrency Vs. Normal currency

Crypto is created by computers, while fiat currencies are issued and maintained by governments. And the limited supply of crypto has a set of maximum of crypto coins. But normal currencies have an unlimited supply and can be produced more by the government when necessary. Another difference is the control of both currencies. Crypto is controlled by cryptography and fully decentralized. In contrast normal currencies are centralized and are controlled by the law and banks.

The value of a crypto coin is not determined by supply and demand, however, in fiat currency it is. The physical way of exchanging money form is via coin, paper or notes. But crypto is presented by private and public piece of code. Fat currencies are acquired by performing sales, investment, salary etc. Whereas crypto can be acquired via the process of mining, cryptocurrency exchanges or via sale of cryptocurrency.

What is Cryptography?

Cryptography is a method for sending hidden messages. One person encrypts a message using some sort of key and algorithm, and the other person can then decrypt it. Some of the tools that were developed for traditional cryptography turn out to have other useful functions as well. The two most important of these are hashing and digital signatures. Therefore, even though neither of these involve the sending of “hidden messages” they’re still considered to be a form of cryptography. Hashing is used by cryptocurrencies to efficiently verify the integrity of data. It is a method for taking large amounts of data and semantically representing it as a short number that is difficult to replicate. Hashing is used heavily to maintain the structure of blockchain data, which holds people’s account balance.

Bitcoin Mining

Miners use special softwares to solve math problems and they are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine and need to approve transactions- more miners means a more secure network. The bitcoin network automatically changes the difficulty of math problems, depending on how fast they are being solved. In the early days, Bitcoin miners solved these problems with processors and their computers. Soon, miners discovered that graphic cards used for gaming were much better suited to this kind of work (but graphic cards use more electricity and generate heat) than chips programmed to special in bitcoin mining.

Thereafter more miners joined the network, making it more difficult for individuals to solve math problems. To overcome this miners developed a way to work together in pools. Each miner is awarded proportionally for the amount of work he or she provides.

Cryptocurrency is ready to change the way people think of money. It has already revolutionized mindsets of people. Because of excessive security, ease and future possibilities.

Lahiru Ariyasinghe

21-01-2019

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