What is cryptocurrency? A beginner's guide to electronic currency

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Bitcoin was developed by Satoshi Nakamoto, a pseudonymous person or team who outlined the technology in a 2008 white paper. It's an appealingly simple concept: bitcoin is digital money that allows for secure peer-to-peer transactions on the internet. Unlike services like Venmo and PayPal, which depend on the original financial system for permission to transfer money and on existing debit/credit accounts, bitcoin is decentralized: any two different people, anywhere on the planet, can send bitcoin together minus the involvement of a bank, government, or other institution.

Every transaction involving Bitcoin is tracked on the blockchain, which is similar to a bank's ledger, or log of customers'funds moving in and out of the bank. In simple terms, it's a record of every transaction available using bitcoin. Unlike a bank's ledger, the Bitcoin blockchain is distributed across the whole network. No company, country, or alternative party is in control of it; and anyone can become part of that network. There may only ever be 21 million bitcoin. This is digital money that can't be inflated or manipulated in just about any way. It isn't necessary to purchase a whole bitcoin: you should buy only a fraction of 1 if that's all you would like or need.

When Bitcoin first appeared, it marked an important advance in computer science, because it solved a fundamental problem of commerce on the net: how do you transfer value between two different people without a trusted intermediary (like a bank) at the center? By solving that problem, the invention of bitcoin has wide-ranging ramifications: As a currency made for the internet, it provides for financial transactions that range across borders and around the planet without the involvement of banks, credit-card companies, lenders, or even governments. When any two people—wherever they could live—can send payments to each other without encountering those gatekeepers, it makes the possibility of an open financial system that is more efficient, more free, and more innovative. That, in a nutshell, is bitcoin explained.

Unlike charge card networks like Visa and payment processors like Paypal, bitcoin isn't owned by a person or company. Bitcoin may be the world's first completely open payment network which anyone with a web connection can participate in. Bitcoin was designed to be utilized on the internet, and doesn't rely on banks or private companies to process transactions Crypto news.

Certainly one of the most important components of Bitcoin is the blockchain, which tracks who owns what, much like how a bank tracks assets. What sets the Bitcoin blockchain besides a bank's ledger is that it is decentralized, meaning anyone can notice it and no single entity controls it.

Specialized computers referred to as ‘mining rigs'perform the equations needed to verify and record a new transaction. In the first days, a typical desktop PC was powerful enough to participate, which allowed pretty much anyone who was curious to try their hand at mining. Nowadays the computers required are massive, specialized, and often owned by businesses or large numbers of individuals pooling their resources. (In October 2019, it required 12 trillion times more computing power to mine one bitcoin than it did when Nakamoto mined the first blocks in January 2009.)

Ethereum, which launched in 2015, is the second-biggest cryptocurrency by market cap after Bitcoin. But unlike Bitcoin, it wasn't created to be digital money. Instead, Ethereum's founders set out to build a new sort of global, decentralized computing platform that takes the security and openness of blockchains and extends those attributes to a vast selection of applications.