Cryptocurrencies share a history that predates Satoshi Nakamoto’s famous 2008 paper. However, it was Satoshi who believed enough in the potential of peer-to-peer digital cash to motivate the release of Bitcoin on January 09, 2009. The idea was eagerly looked into by many who were frustrated following the bailout of the big banks. Here are the essential aspects of a true blockchain-based cryptocurrency:
Before elaborating on each fundamental aspect, it is important to understand two concepts. First, Satoshi’s crowning achievement was solving the double-spending problem. This problem can turn into quite the complex discussion especially when peering deep into the defining algorithms like Bitcoin’s SHA-256. The second concept involves the miners that secure against double spending, “mine” new coins, and validate transactions. Again, the mining dynamic can be presented in immense detail.
Cryptocurrencies are decentralized and operate without a central authority. They are distributed amongst peers. They are immutable in that they cannot be changed. Anyone can anonymously (pseudonymous) use and view (transparent) a cryptocurrency’s blockchain.
This first crypto decade has seen many alterations to the initial idea. Many cryptocurrencies do not resemble a true blockchain-based system. Some incorporate a layered blockchain feature for practicality. Blockchain development is also occurring privately at many large organizations which do not need currency trade within their internal systems. Among the most popular cryptocurrencies are:
Bitcoin’s history is a storybook, characterized by both volatility and technological disruption. Its price has ranged from mere pennies to more than $20,000 U.S. dollars with a volume in excess of 200,000 daily transactions. Litecoin is very much like Bitcoin, except faster. Ethereum, on the other hand, presented a revolutionary application of blockchain technology. Its smart contracts adds a new dynamic to the mere validation of accounts and balances. With these complex, programmable contracts, Ethereum did more to enable new crypto projects than any other blockchain. Ripple uses its cryptocurrency to prevent spam which has become a favorite application within the banking industry. Monero became widely accepted because it provides the privacy aspect lacking in Bitcoin. New cryptocurrency applications occur frequently.