What is Cryptocurrency? An Intro to Cryptocurrency
A Cryptocurrency, or cryptoknosis, is simply a digital currency designed for use as a medium of exchange where only private coin ownership details are kept in a distributed ledger maintained in a digital form. Most of the Cryptocurrencies being exchanged are digital “attributes” of wealth held in common ownership structures. This is a way for individuals to exchange items and services without the need for a traditional exchange of cash, and the ledger provides a transparent, standardized method for the association of value between the value of assets and the value of liabilities. The major benefit of a Cryptocurrency ledger system is that it is self-liquidating; this means that as units of Cryptocurrency are purchased, the associated ledger is immediately liquidated. Also, this system provides an excellent level of privacy because of the self-contained nature of the ledger itself.
The major disadvantage of Cryptocurrences is their inability to function like traditional money. Traditional money such as the US dollar or the British pound exist only as virtual representations on computers or in electronic money networks, with centralized banks acting as intermediaries that trade and manage the value of these currencies. The existence of Cryptocurrences such as BitUSD, Bitvierrit, BitUX and DarkBay make it possible to buy goods and services from anywhere in the world but usually at the current exchange rate against the major currency.
An issue that most worry about is whether a decentralized system of accumulating and transmitting real currencies will become a vehicle for crime. While there are no current known plans for cryptocurrences, concerns still remain to keep the system from becoming a “ICO” or “exchange traded fund,” or “exchange traded product.” The concern with these is that the creators of such could abuse their power by exchanging their private (real) currencies for a large number of virtual ones, much like a “pump and dump” occurs with mutual funds. This would allow dishonest principals to profit from the misfortunes of others while affecting the value of the main currency. Other issues that are similar to those with mutual funds are also possible such as an unsuccessful government attempt to use its stimulus funds to devalue the currency.
Some enthusiasts of cryptocurrency believe that creating a more secure network is necessary to prevent illicit activities, including theft. They therefore prefer to use currencies that are not backed by major currencies. The major drawback of this is that if two parties are both running a software program that alters the supply of a currency then it becomes vulnerable to two separate attacks, one from outside the system and one from inside the system. While some of the strongest cryptography used in the world for digital cash does not include any security guarantees against such attack methods, the lack of absolute security is the number one reason why no major online business is currently using Cryptocurrency as payment method.
The first thing to know about Cryptocurrency is that you are probably going to encounter many different currencies and not just one. The most important characteristic of any good quality of Cryptocurrency is its use of a distributed ledger called theblockchain. The major appeal of Cryptocurrency is that every computer in the global network who has access to the network can agree on the true value of the cryptocoin, known as the cryptocoin price, without having to trust an outside source like a central bank. Since each of the computers is unique it’s impossible for someone to counterfeit the value of the currency that resides on your computer.
With the rise of decentralized organizations and autonomous governments the future of Cryptocurrency is very bright. One of the biggest challenges for people who are trying to get into the business of decentralized organizations is ensuring that their network is protected from outside influences. In the case of Cryptocurrencies there are two different things that can happen. The two different forces that could affect the future of Cryptocurrency are government regulation and the prevalence of decentralized autonomous organizations.