What is cryptography and how does it work? - Everything you need to know
Cryptocurrency Definition
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
What is Cryptography?
Cryptography is the use of secret codes to protect information. Cryptocurrency is a digital currency that uses encryption techniques to regulate transactions and control its circulating supply through a process known as mining. This cryptographic system was designed to solve the double spending problem. Mining involves adding transaction records to Bitcoin's public ledger of past transactions (blockchain). This blockchain serves two purposes: firstly, it prevents double spending by ensuring only validated transactions can be added to the block chain; secondly, it provides verification of bitcoin ownership by each user.
Why should I learn Cryptocurrency?
Cryptocurrencies are useful for sending payments over the internet. Merchants receive payment in this form without having to rely on credit card companies. With the increasing need to transfer large amounts of money, cryptocurrencies are a cost effective way to send money across borders. Most importantly, merchants do not have to pay any fees for accepting payments.
How Does Cryptocurrency Work?
Cryptocurrencies rely on cryptography, or codes, to secure their network. Cryptography ensures the authenticity and integrity of a transaction. When someone sends Bitcoin to another person, this information has to go from sender to recipient via a third party called a middleman. These third parties are known as miners. Miners use powerful computers (specifically graphics cards) to help verify transactions using complex algorithms.
When a user wants to buy something, they have to send out some cash first and then wait for the approval of the miner. Once approved, the miner adds the transaction to a block of data that is stored in the blockchain. This block becomes the starting point for the next block. Each subsequent block builds upon the previous block until the entire chain is complete. At the end of each block is a time stamp and a hash value. Hash values are a numerical result of an algorithm used to create a unique identifier. They are similar to checksums found at the start of e-mails.
The blockchain is secured through cryptography. In order for a hacker to alter the records, they would need to change the original hash value and re-create the block. To do this, they would need to guess the correct number - an impossible task since it takes an enormous amount of computing power.
Cryptography is the science that deals with encryption techniques used in information security. Cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure financial transactions. Bitcoin is the first decentralized digital currency.
Cryptocurrency examples
There are thousands of cryptocurrencies. Some of the best 10 known include:
1. Bitcoin
Founded in 2009, Bitcoin was the first cryptocurrency and is still the most commonly traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for an individual or group of people whose precise identity remains unknown.
2. Ethereum
Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.
3. Litecoin
This currency is most similar to bitcoin but has moved more quickly to develop new innovations, including faster payments and processes to allow more transactions.
4. Ripple
Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. The company behind it has worked with various banks and financial institutions.
5. Ethereum Classic (ETC)
Ethereum Classic is a version of the Ethereum blockchain. It runs smart contracts on a similar decentralized platform. Smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interface. Like Ethereum, it provides a value token called “classic ether,” which is used to pay users for products or services.
6. Zcash (ZEC)
Zcash is a digital currency that was built on the original Bitcoin code base. Conceived by scientists at MIT, Johns Hopkins and other respected academic and scientific institutions, it was built on a decentralized blockchain. A core feature and differentiation of Zcash is an emphasis on privacy. While not a function available to investors on Equity Trust’s platform, users can send and receive Zcash without disclosing the sender, receiver, or the amount transacted.
7. Stellar
Stellar’s native cryptocurrency is the Lumen (XLM). Stellar is designed as an “open network for storing and moving money” that allows people to create, send, and trade digital money. It’s designed to sell and trade all digital monies, not just Stellar’s own associated cryptocurrency, the Lumen — although you’ll need to own some Lumen to make transactions.
8. USD Coin
USD Coin (USDC) describes itself as “the world’s digital dollar.” Created by a global financial firm called Circle, USDC is the result of work that has been invested in by Goldman Sachs, Baidu, and IDG Capital, among others. USD Coin is tied to the U.S. Dollar, which makes its price much more stable than other cryptocurrencies. That stability lends itself more toward digital payments, while other cryptocurrencies have more potential to increase in value as investments (along with more risk of losing value, of course).
9. Dogecoin
Dogecoin (DOGE) was originally created as a meme or parody cryptocurrency, but that didn’t stop it from seeing a surge in value in early summer 2021. Tesla CEO Elon Musk has weighed in on Dogecoin, which helped drive its surge in value and popularity before it fell back dramatically in the second half of the year.
10. Chainlink
Chainlink (LINK) uses “real-world data and off-chain computation while maintaining security and reliability,” according to its website.
Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.
Where can I find Cryptocurrency jobs?
Cryptography is the study of codes that are designed to safeguard information. Cryptocurrency uses cryptography to secure the transactions and to protect against cyber attacks. A digital currency is a type of currency where value is stored digitally and represented using code (cryptography).
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Cryptography is the science of securing information through encryption. Cryptocurrency is a digital currency that uses cryptography for security. In this video we explain what cryptography is and how it operates at its core. We discuss what Bitcoin is and the many factors behind its popularity. We explore how decentralized applications work and provide an overview of how cryptocurrency wallets work.
Blockchain Technology
The Blockchain technology was invented in 2008 by Satoshi Nakamoto. The Blockchain is a distributed database that underlies cryptocurrencies like bitcoin like a set of account ledgers. Every time a user makes a transaction, this information gets recorded by adding a unit of data onto the blockchain known as a block. Each successive block contains a reference back to the previous block allowing the history of the activity to be verified. The blocks are linked together forming a chain of blocks. The blocks also contain timestamps that validate each block̢۪s authenticity. The Blockchain can only be changed once the majority of users have updated the ledger. To update the ledger, users need to solve complex equations and then broadcast these results to the network. Once validated, the last block becomes permanent and unalterable forever.
We then compare the differences between mobile apps and web wallets before explaining the top 5 hardware wallets.
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