What are cryptocurrencies?

Cryptocurrency has become a worldwide phenomenon known to the majority of people. but most people - even bankers, scientists and developers often fail to figure out even the most basic concepts beyond cryptocurrencies.

Satoshi Nakamoto, the inventor of bitcoin actually had no intention to invent a new currency. His intention was to create something that many failed to create before digital currencies. Actually the most important part of what he did was to invent a decentralized cash system. After seeing the failed attempts to create a centralized cash system, he tried to build a digital cash system that didn’t rely on a central entity. This became the birth place of cryptocurrencies. Let’s put it as simple as possible:

To create digital cash, you are going to need accounts, balances and transactions. But the major problem with payment networks is to prevent double spend (i.e. one account spends the same amount more than once). Traditionally this prevention is done by a central server that keeps the record of balances and transactions. But in bitcoin, as a decentralized network, you do not have such server!

So you need every peer(account) of your payment network to keep the record of all transactions to make sure if future transactions are valid or just an attempt to double spend. 

So simply, cryptocurrencies just like other currencies are just limited set of entities in a database, that no body can change until they fulfill specific conditions.

However, cryptocurrency transactions are a bit different from normal traditional transactions, as they are irreversible. It means after confirmation, a transaction can not be reversed. Also crypto transactions are pseudonymous. Accounts and transactions are not signed by real-world entities (human beings), thus making every activity in the network anonymous. Also they are fast and global, as every transactions is propagated within minutes in the whole global network. Last but no least, crypto transactions are incredibly secure due to cryptographic encryptions that allows only private key owners to be able to transfer money from each account.

The crypto revolution is already happening as industrial institute are starting to buy cryptocurrencies. Cryptocurrencies will change the world, you can either stand by and observe, or be the part of this revolution.


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