Just what is Cryptocurrency and where did it come from?
Cryptocurrency is a digital form of currency which exists only electronically – on the web, on your home computer, laptop or mobile device.
This is a fundamental difference from more traditional currencies which we have all grown up with. Traditional currencies such as cash bank notes and coins, gold and silver. All cryptocurrencies are digital, and non-physical – meaning you can’t touch them or destroy them (unless you destroy the device(s) storing them).
Cryptocurrencies offer a high level of security, and in most cases anonymity too. Consequently many people view Cryptocurrency both with great optimism, and a level concern.
The concept of digital currency is nothing new. Many have tried and failed in the past to create digital currencies. However it wasn’t until the birth of Bitcoin, the first and most well-known Cryptocurrency, that a successful digital currency was achieved.
Where did the name come from?
Cryptocurrency takes it’s name from Cryptography, the practice of taking legible messages and information, and converting it into near unbreakable codes and cyphers. Cryptography really came to the fore during the second World War, with the growing need for secure communications. Over time, technology has evolved and the digital era has brought about great advances is computing power and efficiencies. As a result, Cryptography has become the domain of computer science and most of our everyday communications. Text messages and emails, are all now encrypted to some level with sophisticated cryptography.
Cryptocurrency and “Digital Wallets”
Cryptocurrencies are shared between digital ‘wallets’ which send and receive amounts of Bitcoin for example. This is all done over a peer network of ‘nodes’ (servers dedicated to serving and recording transactions). Each wallet has a pair of cryptographic ‘keys’, a ‘public key’ and a ‘private key’. The public key is essentially a users public address – they can share this and people can specify it and send cryptocurrency to it. The private key is kept secret and effectively grants access to that wallet to only the owner.
The most prolific Cryptocurrencies such as Bitcoin are founded upon this use of Cryptography, coupled with Blockchain technology.
To read more on What is Bitcoin? click here.