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What Are Cryptocurrencies? What Are Cryptocurrencies?
Cryptocurrencies are cryptographically secured digital currencies which run using blockchain technology. They use a decentralized peer-to-peer network to process transactions. Bitcoin, Ethereum, and Litecoin are cryptocurrencies, along with many altcoins which have emerged since Bitcoin’s debut in 2009.
Transactions processed using cryptocurrency are typically publicly viewable and cannot be tampered with once they are stored on the blockchain, a type of a public ledger. Other Words for Cryptocurrency
A cryptocurrency is often called a digital currency, virtual currency or crypto. Check out our cryptocurrency definitions page if you are interested in learning about definitions, terminology, acronyms, and slang. Cryptocurrency Characteristics
Here is a quick summary including some of the characteristics of the cryptocurrencies:
- Cryptocurrencies are peer-to-peer digital currencies.
- They are powered by blockchain technology.
- They are secured cryptographically.
- Cryptocurrencies are validated using mining.
- There are various mining algorithms used for this purpose.
Which Is the Leading Cryptocurrency?
Bitcoin (BTC) is the leading cryptocurrency by market cap. It has more public awareness than any other cryptocurrency and was the original crypto, released in 2009 by the anonymous pseudonym, Satoshi Nakamoto.
Satoshi’s true identity is unknown. He or she disappeared shortly after WikiLeaks begun accepting Bitcoin for donations.
WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us. Satoshi
Craig Wright claims to be Satoshi but has never given sound public proof. Wright gave fake technical proof to the BBC and the Economist in May 2016 and has since been labeled “Faketoshi” by members of the community.
There are theories that the real Satoshi Nakamoto could be the late Hal Finney, or Nick Szabo, amongst others. These theories are backed only by circumstantial evidence.
Inventors of the most important technologies in Bitcoin: digital signatures and Merkle trees (Merkle), elliptic curve crypto (Koblitz), malicious-fault-tolerant consensus (Lamport), elliptic curve crypto (independent inventor: Miller). pic.twitter.com/pIgTmGMGPZ
— Nick Szabo (@NickSzabo4) August 23, 2018
Many believe that the NSA likely know the true identity of Satoshi through the use of stylometry.
Major CryptocurrenciesList of Major CryptocurrenciesCryptocurrencyDescriptionBitcoin (BTC)Bitcoin is the original peer-to-peer cryptocurrency founded in 2009 by Satoshi Nakomoto.Ethereum (ETH)Ethereum is a smart contract platform for decentralized applications (dapps). XRP (XRP)Ripple created XRP as a distributed network on which transactions can be made, near-instantaneously. Bitcoin Cash (BCH)Bitcoin Cash is a hard fork of Bitcoin (BTC) with an 8MB block size as opposed to Bitcoin’s 1MB. Stellar (XLM)XLM (or lumens) is the native asset of the Stellar Blockchain. Stellar aims to facilitate the movement of currency across borders quickly and at low cost. EOS (EOS)EOS is a decentralized application platform, similar to Ethereum. EOS aims to achieve greater scalability than Ethereum but has some drawbacks, including less decentralization and questionable governance. Litecoin (LTC)Litecoin is a source code fork of Bitcoin, so shares many similarities to the leading coin. Differences include its Scrypt mining algorithm and its higher limit for the total number of coins that can be created. Cardano (ADA)Cardano was created by one of the Ethereum co-founders, Charles Hoskinson. Cardano claims it will be capable of running financial applications. It is being constructed in layers. Monero (XMR)Monero is the leading privacy coin. Transactions on Monero’s ledger are obfuscated which means third parties cannot determine the source or destination of the funds. TRON (TRX)Tron was founded by Justin Sun, and claims to be dedicated to “the establishment of a truly decentralized Internet and its infrastructure.” The project is not without controversy, having borrowed source code heavily from other projects. IOTA (IOTA)IOTA was designed for Internet of Things (IoT) devices. IOTA enables data and financial exchange between these devices. Dash (DASH)Dash is a Bitcoin fork that enhances privacy, has low fees and near-instant transactions thanks partly to a proof of stake mining algorithm. Binance Coin (BNB)The Binance cryptocurrency exchange issued BNB. Users of the exchange can utilize the coin to pay reduced trading feesNEM (XEM)NEM stands for New Economy Movement and is a fork of NXT. NEM’s blockchain is designed for speed and scale and uses “supernodes” to achieve consensus. NEO (NEO)NEO is a Chinese blockchain project which aims to create a smart economy through the use of digital assets, digital identity and smart contracts. Ethereum Classic (ETC)Ethereum Classic is a fork of Ethereum which came shortly after the notorious DAO Hack. While Ethereum effectively rolled back the resulting transactions from the bad actor(s) created during the hack, Ethereum Classic chose to continue the chain without altering these transactions. Tezos (XTZ)Tezos is similar to Ethereum and EOS in that it facilitates smart contracts and dapps. Tezos uses on-chain governance and proof-of-stake mining algorithm known as “baking.” Are Litecoin and Bitcoin the Same?
While they have many similarities, they are not the same. Litecoin (LTC) uses the Scrypt mining algorithm, which is more simple than Bitcoin’s SHA-256 algorithm. Litecoin also has a maximum limit of 84 million coins that can ever exist, whereas Bitcoin has a limit of 21 million. Transactions on the Litecoin network will be confirmed after around two and a half minutes, faster than Bitcoin’s approximate 10 minute confirmation time. What Is Ethereum?
Ethereum (ETH) is a decentralized, open source blockchain platform which enables technology known as “smart contracts.” Smart contracts enable decentralized applications (dapps), which developers can create to serve a variety of purposes in many different industries. Ethereum can be used to exchange money or anything else of value, and via smart contracts, these exchanges can happen once certain conditions have been met. The Ethereum ledger is public, and all historical transactions are publicly viewable. What Is Ethereum Classic?
In July 2016, Ethereum implemented a contentious hard fork to restore funds stolen during the DAO hack; a hack involving the theft of 3.6 million ETH. During this fork, miners who contended the restoration of stolen funds chose to continue mining on the previous chain, and Ethereum Classic (ETC) was born. What Is Ripple?
Ripple is the settlement system and network created by Ripple Labs Inc. It supports tokens tied to many units of value including fiat currencies and commodities.
Ripple’s native currency, XRP, was previously also referred to as “Ripple.” But since the question of whether XRP is a security remains unanswered, Ripple Labs have tried to distance their company and platform from the XRP cryptocurrency. What Is XRP?
XRP is the native cryptocurrency of Ripple. It is used to help transfer value across the Ripple network. XRP acts as the bridge between two units of value on the peer-to-peer Ripple network.
How Is Cryptocurrency Secured? How Is Cryptocurrency Secured?
Cryptocurrencies are secured via a system called “mining.” Miners are responsible for verifying transactions and adding them to the blockchain. How Do You Mine a Cryptocurrency?
The process of mining a cryptocurrency varies depending on the mining algorithm utilized on the specific network. Proof of Work (PoW) mining is done using powerful GPU or CPU devices, sometimes purpose-built, which work to solve complex mathematical equations in order to solve a “block” and verify transactions.
It is essential in cryptocurrency mining that miners have a financial stake involved in reporting transactions and maintaining the ledger honestly. Financial commitments come in the form of equipment costs, electricity costs, and sometimes staking costs. If there were no financial commitment required for miners, there would be nothing to stop dishonesty. Proof of Work