Cryptocurrency:
Cryptocurrency is a digital or virtual currency that uses cryptography (the science of secure communication) to ensure secure and transparent transactions. Cryptocurrencies use a decentralized system that operates independently of central banks and governments. Unlike traditional currencies, cryptocurrencies are not issued by any central authority and rely on a network of computers to maintain their integrity and security.
Bitcoin:
Bitcoin is the first and most well-known cryptocurrency. It was created/ mined in Jan, 2009 under a pseudonym Satoshi Nakamoto.
Bitcoin is a decentralized digital currency that operates on a peer-to-peer network and is used to transfer value securely and anonymously. That makes it the first successful digital currency not issued/ controlled by banks or any financial institutions.
Bitcoin transactions are recorded on a public ledger called the blockchain, which is maintained by a network of computers.
The original white paper on Bitcoin was published in Oct, 2008 under the pseudonym Satoshi Nakamoto – https://bitcoin.org/bitcoin.pdf
Blockchain:
A blockchain is a distributed, decentralized ledger that records transactions in a secure and transparent way. It consists of a network of computers that work together to verify and validate transactions. Each block in the blockchain contains a cryptographic hash of the previous block, creating an unbroken chain of blocks that cannot be altered without the consensus of the network.
In the case of Bitcoin, the blockchain is used to record and verify transactions. When someone sends Bitcoin to another person, the transaction is broadcast to the network, and a group of computers (known as miners) race to validate the transaction by solving a complex mathematical problem. Once the problem is solved, the transaction is verified and added to the blockchain, and the miner who solved the problem is rewarded with new Bitcoins.
Other Cryptocurrencies:
Bitcoin is just one of thousands of cryptocurrencies that exist today. Some of the other popular cryptocurrencies include Ethereum, Litecoin, and Ripple. Each cryptocurrency has its own unique features and uses, but they all operate on the same basic principles of decentralization and cryptography.
In summary, cryptocurrencies like Bitcoin use cryptography and a decentralized system to ensure secure and transparent transactions. The blockchain is a distributed ledger that records transactions in a secure and transparent way, and is maintained by a network of computers. While Bitcoin is the most well-known cryptocurrency, there are thousands of others that operate on the same principles.
What is Cryptocurrency Used for?
Similar to fiat money such as the U.S. dollar, cryptocurrency can be used to buy and sell goods and services, as well as to transfer currency to others. Cryptocurrency can be sent directly from peer-to-peer and can also be handled by cryptocurrency exchanges.
Keep Learning More: –
Fiat Currency: Fiat currency is the “traditional” currency.
- Is not backed by a physical commodity such as gold or silver.
- Is issued and controlled by governments or central banks.
- Its value is derived from the government’s declaration or fiat that it is legal tender. It is determined by supply and demand in the foreign exchange market and is subject to fluctuations in value relative to other currencies. This means that the stability of the government and its economic policies can have a significant impact on the value of its fiat currency.
- Can be used to pay for goods and services.
- Driven by interest rates and money supplies
Commodity-backed currencies: “Historic” currency backed by a physical commodity such as gold, silver, or other precious metals used in historic barter systems.
- value of the currency is directly linked to the value of the commodity,
- the amount of currency in circulation is limited by the amount of the commodity available to back it up. For example, if a country has a gold-backed currency, the amount of currency in circulation would be limited by the amount of gold held by the government or central bank.
- Prone to fluctuations with the fluctuations in the value of the commodity
- More difficult to manage, as they require the constant monitoring and management of the commodity reserves.
BlockChains
- Decentralized
- Centralized
Mining:
Wallets, Key, Addresses, Nodes and Clusters:
Exchanges:
- Custodial : eg Retail like Coinbase.
- Non-Custodial : eg (DEX)
- Examples
- Retail
- Peer to Peer (P2P) : can be either custodial or non-custodial
- Decentralized (DEX)
Alternative Coins/ AltCoins
- Native Tokens
- Synthetic Tokens
- Misc