Review of Definition, Origin and Popularity of Cryptocurrency

What Is Cryptocurrency?

The word ‘crypto’ comes from the Greek word meaning ‘hidden’; ‘crypt’ translates as ‘hiding place’. These form a private, hidden and secure currency. Cryptocurrency is a decentralized currency that uses peer-to-peer technology, which enables all functions such as currency issuance, transaction processing and verification to be carried out collectively by the network. Cryptocurrencies are highly secure electronic currencies that run on blockchain technology.

Origin: Despite the origins of the technology dating back to the 1980s, cryptocurrencies as we know them are a relatively new development. Bitcoin dates back only to 2008 when Satoshi Nakamoto (whose identity remains unknown) unveiled a white paper outlining its first principles, combining decentralized control, user anonymity and record keeping on the blockchain. In 2009, Satoshi released Bitcoin, and a small group of enthusiasts began exchanging the currency. From this point, alternative cryptocurrencies and exchanges appeared, and a few merchants began to accept digital currencies.

Why the need for this concept? Founded in 2009, Bitcoin (the first cryptocurrency) was born from the notion of creating a currency that was independent of any other authority, is transferable electronically instantaneously and has low transaction fees. Each coin, transaction, and person involved is given a code. Cryptocurrencies involve layers of encryption, built one upon another, which makes them anonymous, secure and unique. Every layer is stored infinitely on a distributed master ledger, the blockchain, and every cryptocurrency holder has a key that authenticates their identity, allowing them to buy and sell.

Why It Went Viral?

Since its inception, cryptocurrency (particularly Bitcoin) has increased in value exponentially, particularly in 2016 and 2017 as more and more people began accepting cryptocurrency as a credible form of currency and not just a buzzword for tech insiders. Bitcoin’s growth can be tracked down to a number of factors. Firstly, the cryptocurrency model itself enables project developers to bypass banks in order to gather funds. For merchants, there is the benefit of being able to expand to new markets. This creates net results of lower fees, fewer administrative costs and a wider reach across previously inaccessible markets.

How it works: A bitcoin wallet holds the bitcoin address, which keeps a record of all of our transactions, and therefore the details of our total balance. This address is also known as the “public key” that is made available to everyone. Each address/public key has a corresponding “private key”. This is private, and it’s crucial that we keep it secret and safe. The two keys are related, but there’s no way to figure out the private key from the public key. Any transaction issued from our bitcoin address needs to be “signed” with our private key. To do that, we put both the private key and the transaction details (how many bitcoins we want to send, and to whom) into the bitcoin software on our computer or smartphone. With this information, the program spits out a digital signature, which gets sent out to the network for validation. This transaction can be validated by confirmation that we own the bitcoin and that we are transferring it to someone, and that we haven’t already sent it to someone else. This is one of the genius parts of bitcoin: if the signature was made with the private key that corresponds to that public key, without knowing what the private key is. Is cryptocurrency the future of money?

This is quite literally, the billion-dollar question and one that not many know how to answer. There are over 740 types of such coins, and this is a number that will continue to grow. Many believe that as soon as one dies out, or is made illegal, another will just simply pop up in its place. The way things are at the moment, it seems very unlikely that as a concept, it will die out. The truth is that after several global financial crises and a growing public distrust of banks and governments – people love the idea of a currency that is controlled by no one. With an ever growing feeling that we are being watched over, we are able to buy, sell, save, invest, and trade without being monitored, held accountable or observed by a third party.

It gives people freedom, by disassociating from centralized systems and authorities, it gives power back to the public to control their wealth and the value of the money that they have. The popularity of digital currencies and cryptocurrencies is bound to flourish. I believe that digital currency is the future and that sooner or later; the banks and government will consider working in harmony with those that are creating and purveying digital currencies in all of its forms.