Cryptocurrencies explained for the average person
You may have heard of cryptocurrency in the course of your reading – or even stumbled into a website that accepts them as payment – but do you really know what they are? Read on and you will learn the intricacies of this powerhouse payment method of the information age.
What is Cryptocurrency?
It is commonly held that Satoshi Nakamoto is the inventor of that initial software code that invented the first successful cryptocurrency (known as Bitcoin), even though it was not his initial intention. Its initial scarcity and relative difficulty to duplicate created both value and demand, which in turn led to it being traded as virtual currency. While electronic payment methods that were not dependant upon a physical currency had been attempted in the past, Satoshi’s bitcoins became the first in a generation of cryptocurrencies that would change the way that people pay for goods and services online.
How Are They Created?
Cryptocurrencies are commonly created in a method similar to peer to peer sharing on platforms such as Napster and its successors. This is often referred to as mining. The main problem that Satoshi solved is the problem of potential double spending (people spending the same currency twice on different transactions) by decentralizing the transaction list and ensuring every peer in the network has a list of all transactions.
As far as cryptocurrencies are concerned, Bitcoin is hardly the only game in town. Altcoins and Ethereum are two examples of two competing electronic currencies that are making the market more dynamic. Altcoins are very diverse and include such brands as Novacoin, Litecoin, and Zetacoin. Litecoin currently considered the most competitive in the industry. Ethereum is both a programming language and a trading platform, marketed as a way to enable people to buy and trade nearly anything.