Cryptocurrency, a medium of exchange, is a 'Blockchain-based' technology, which literally means it is based on 'Blocks'. They are all stored in a blockchain where each blockchain has its own digital coin. These Blocks are packages that carry permanently recorded data. The most popular example is Bitcoin. As a transaction occurs, the information for each transaction is collected and then validated by the network. This data will eventually reach a predetermined size, and then will be combined into a 'Block'. As these blocks are created they do not stand solo - they become linked with the other blocks to form a chain [= blockchain].
- Synonyms of a Cryptocurrency: Digital Tokens, Tokens, Digital Assets, Digital Currency, Virtual Currency, Crypto Coins, Digital Coins, etc.
- Each crypto type has its own property and function.
- It is unlike a traditional currency - backed by a physical commodity such as gold or silver, or a Fiat currency like the U.S. Dollar (a legal tender) declared by the government which is based on the relation between supply, demand, and the credit of an economy.
- It can be considered as a Tech Stock than a Currency.
- It is a combination of Cryptography and Currency.
- Crypto Hitory:
- 2008 - White paper (https://bitcoin.org/bitcoin.pdf) introduced by "Satoshi Nakamoto" - an unknown person/people.
- 2009 - Released as open-sourced software
- 2010 - Control handed over to Bitcoin core developers
- 2011 - Altcoins introduced
The most impressive basis of this technology is that it is managed by a Peer-To-Peer network, which is a type of architecture that provides equal privileges for the workload and to perform tasks, such as making transactions.
Example Transaction ETH (Etherium) from one wallet to another is shown below:
Blockchain Technology: It is a file or a record or a ledger that can be publicly viewed as a journal to see historical transaction data. The transaction data block is linked to another block, as these blocks DO NOT exist alone. They become linked with other blocks (blockchain). Each block contains a proof of work (POW) identity and the previous block identity which verifies the amount of computational effort that has been done. A Blockchain protocol runs on a peer-to-peer network of computers and holds an identical copy of this ledger, which is public and everyone can inspect it and cannot be controlled by a single person.
- A wallet
- Mining software
- Mining pool acceptance
- Register with a cryptocurrency exchange
- The best internet you can afford
- A cool space
- Mining computer
- GPU or ASIC chip