What is Cryptocurrency?
A Cryptocurrency is any digital currency designed to function as a medium of payment, where user coin ownership is recorded in a virtual ledger in a form of electronic database with strong encryption to ensure integrity. The word Cryptocurrency comes from the Greek words: crypt, meaning concealed and cosmogony, meaning secret. Unlike conventional money that is printed and issued by governments, Cryptocurrency is controlled by an independent distributed network. The Internet and peer-to-peer technology provides the backbone for Cryptocurrency.
Unlike conventional currencies, Cryptocurrencies are constructed on a distributed ledger and not controlled or printed by a government. Most Cryptocurrencies follow the same architecture of open source software code that enables anyone who is interested to develop, build or use it for their own purposes. All Cryptocurrencies are built with an open source code, which implies that every time there is an update to the underlying software, the client computers will also be updated accordingly. As such, no one person or organization can gain control over the supply, circulation and storage of Cryptocurrency.
In the future there will be several distinct types of Cryptocurrencies. One of the most well-known is the Litecoin, which was created in November of last year. It is believed that Litecoin’s creator, Charlie Lee, was inspired by the Japanese experiment with coin buying called kyuribpac. There are two main characteristics that distinguish Litecoin from other Cryptocurrency. First, it is mined utilizing a special type of hardware that only a small percentage of users are able to access; and second, it utilizes Proof-of-Capacity (PoC) in which each transaction is guaranteed to be valid unless another event occurs which invalidates the transaction.
The major difference between Litecoin and other Cryptocurrencies is that its blocks are assembled in a manner that is different than those of other blockchains. In order for a transaction to be completed within the Cryptocurrency, it must first be broadcast to the network, then approved by users if they agree and finally be confirmed by the network’s nodes before being able to complete. The proof-of-capability system used in Litecoin ensures that each transaction is valid, which allows both third parties and the creator of the Currency to monitor the transactions as they occur.
There are several other unique characteristics of the Cryptocurrency that differentiate it from other forms of Cryptocurrencies. One of the primary differences is that it is mined autonomously by the users, meaning that it is not controlled by any central banks or regulating bodies. This is in contrast to other Cryptocurrency which are controlled by governing bodies or central banks, which act as gateways to allow all users to make use of the infrastructure that the currencies utilize.
The second major characteristic of the Cryptocurrency is that unlike conventional cryptocurrences, the main way in which users interact with it is through transactions. Transactions occur through the mining process, which requires an adequate amount of computing power on the part of all users who wish to start a new transaction. The result of this interaction of course results in the creation of new coins and new blockchains. Through this method, it is possible for two users with opposite priorities to both create a transaction fee to balance out their transactions.
There are also several other characteristics that differentiate the Cryptocurrency from other forms of Cryptocurrences. Unlike regular Cryptocurrences which only function as intermediates between users and producers, a Cryptocurrency includes ownership rights attached to the cryptographic units that have been issued. When a user owns a certain number (set by the cryptographic issuer) of these cryptographic units, they have the ability to transact with anyone they choose. This is in contrast to other cryptocurrences where the owner of the unit is limited to only other owners. This gives the decentralized nature of the Cryptocurrency an additional benefit, as it allows users the ability to participate in economic activity irrespective of their location.
In conclusion, it can be seen that the differences between Cryptocurrency and regular Cryptocurrences is purely a matter of implementation. Regular Cryptocurrences function using a Proof of Authority system that involves a central administrator that creates specific amounts of “digital coin” to be owned by users. When this owner deposits money into their digital wallets, they are able to spend their money however they see fit. This system works perfectly fine when there are no restrictions, which is why there are no restrictions applied to the transfer of bitcoins and thorium when using a popular online wallet such as PayPal. With Cryptocurrency, owners are allowed to control their own funds, so theoretically one could even print off millions (or billions!) ofetherium and bitcoins at will, and spend them however they like.