Few people know that cryptocurrencies were created as a side project of attempt to create digital money. During the 90s there were several unsuccessful attempts to create digital currency. But the attempts did not stop there, an anonymous person or group of people using the alias Satoshi Nakamoto succeeded in 2008. Satoshi invented the first peer-to-peer digital currency with decentralized network and started the new era of modern money.
Cryptocurrency is a decentralized, encrypted digital money used to verify transactions with open source peer-to-peer software.
The transfer operates independently of central banking and governments successfully avoiding the fees that come with using financial institutions.
Transactions are added to a public ledger (blockchain) via nodes on the network with agreement achieved through a proof-of-work system referred to as “mining”. Blockchains are designed to be decentralized, and so before it’s able to be processed every computer connected to the network must successfully confirm the transaction.
The validity of each cryptocurrency is provided by a blockchain technology. A blockchain is a continuously expanding list of records, called blocks, which are secured and linked using cryptography. Each block contains a hash pointer as a link to a previous block, a transaction data and a timestamp. By design, blockchains are constitutionally resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. For use as a distributed ledger, a blockchain is managed by a peer-to-peer network collectively complying to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the modification of all subsequent blocks, which requires collusion of the network majority.