For a decade now, cryptocurrency has made headlines all over the world. Arguably one of the most difficult digital aspects to understand, cryptocurrency is more than just a fad. Financial institutions, accounting firms, online payment portals such as PayPal, the government and even software companies have all done their due diligent research on cryptocurrencies.
What exactly is a cryptocurrency, though? In this article, we will look at digital currencies, including cryptocurrency, how they affect us, where they come from and some of the most prominent names in the cryptocurrency game.
As the rule goes: all cryptocurrency is digital currency, but not all digital currency is a cryptocurrency. Digital currency, by definition, is a type of currency with no physical form, such as bank notes or coins.
Digital currency can be found virtually everywhere, and is used for localized goods and services. One example would be Microsoft Points that are used to purchase games and downloads within the Microsoft online retailer world.
Online vendors of games, social networks and the like all use a form of digital currency to sell goods and services. You can use actual currency to purchase digital currency (for example paying from your bank account balance to purchase in-game coins), and in some instances, you can use digital currencies to purchase tangible goods.
Where the digital currency stems from depends on if the money is centralized or decentralized. Digital currency, unlike cryptocurrency, can be either. If a digital currency is centralized it stems from a single origin source. Microsoft Points, from the previous example, are centralized, since the currency only has one originating point.
Cryptocurrency, on the other hand, must be decentralized, or having many source points. This is the very reason all attempts prior to 2008 have failed. Each attempt at a cryptocurrency met with resistance because the centralized aspect of the currency was able to be found, used or insecure.
When Bitcoin was created in 2008 it wasn’t designed to be a currency. However, all the pieces fit together and because of the decentralized method of encryption and uses for the Bitcoin, it evolved into the first, and most powerful cryptocurrency in existence.
In The News
Cryptocurrency first made headlines in 2008. Satoshi Nakamoto didn’t even know he had invented a currency. His press release stated that his invention, Bitcoin, was a peer-to-peer digital cash system.
What he had done though, is create the method for cyrptocurrencies to succeed. By providing a decentralized system for checks and balances to prevent double usage of the digital currency that is virtually impervious to hacking.
In more recent news, Bitcoin came under fire. Bitcoin prices rose to record highs and then the bottom seemingly fell out. With a ban on Bitcoins from Bank of America as well as all of China, people began to fear the bubble was over and started unloading their currencies.
This lasted about two months with Bitcoin prices falling almost daily from over 20,000 USD to about $9000 USD before things started to calm down. Now, China has stated that they will lift the ban on Bitcoins and cryptocurrency and Bank of America is once again considering the possibilities.
Types of Cryptocurrency Companies
There are literal pages of results when you look at cryptocurrency companies. Bitcoin is the largest and the most dominant in the field, but there are others that are trying to match them step for step. Here is a brief look at some of the most popular ones.
Monero is an open-source cryptocurrency that put its main focus on creating a currency that is secure as well as private. New units are created with the mining process and software that is provided for free.
Because of the added privacy, Monero has been used by malicious hackers who take the code for mining and attach it to unsuspecting websites. Mining has a high demand on resources and the ability to share those resources greatly reduces the time it takes to create a new unit and the server demand.
With Monero, illicit use is more palpable due to their efforts to provide security to the sender, recipient, process and records. While making the entire process more secure and private, they have also created a subclass of persons with bad intentions which is being closely watched by government agencies.
Despite the illicit use opportunities that arise with most cryptocurrency operations, Monero has steadily become one of the powerhouse mining and currency providers behind Bitcoin.
Ethereum is one of the few cryptocurrency creators that was established by crowd-funding. In 2015 Ethereum took start with almost 12 million coins for distributors. Etherem uses block-chain algorithms in a decentralized virtual machine to create coins.
The mining is open source and the transactions are used to pay miners for developing more coins. In 2016 Ethereum was split into two separate block-chains: Ethereum and Ethereum Classic.
As a result of the easy to use software, Ethereum has grown exponentially since its inception. The company recently hit a milestone of a trading price of $1000 USD. Mining produces coins called ether. The software also utilizes a product named “gas” that helps prevent spam and increases security for the users, the block-chain and the coins.
Ether is also used to trade on cryptocurrency exchanges with the symbol ETH.
Dash is a pioneer in new technologies with cryptocurrency. They began under the name XCoin and within a month had changed to Darkcoin where they developed the Decentralized Autonomous Organization (DAO) project. A year later they rebranded again under the name Dash, which comes from combining Digital and Cash.
The DAO project caught the eyes of many other cryptocurrency contenders, such as Bitcoin and Ethereum. And it shortly fell apart. This caused the Ethereum split and for Dash to reestablish itself as a main contender.
They did just that, though. Now Dash is stronger than ever and provides masternodes for its functionality. This is unlike Bitcoin who uses a single-node for all functions. Single node networks use miners for all functions of the company.
Dash has a two-tier program where the first tier is for miners of the coins and the second tear has the masternodes for the treasury, PrivateSend, InstantSend and the core government of the company.
These masternodes can be purchased and shared, with 10% of the proceeds going to fund the top tier programs.
PrivateSend is a process of mixing coins and obscuring sources to allow wallets to mix their coins and prevent theft, loss or discovery. InstantSend makes use of the masternode network to provide instant transactions by solving the double-spend problem without the long process of Bitcoin.
Ripple’s claim to fame is the ability to provide virtually free, instant transactions on a global scale with no chargebacks. Ripples are the cryptocurrency of Ripple and are traded on the Bitcoin exchanges under XRP.
As of Janurary 2018, the co-founder of Ripple became wealthier than the co-founders of Google, with an estimated net worth of of 59 billion USD. The company works with global banks, financial institutions and others to provide their transaction services that all but eliminate fees and chargebacks on transfers, money movement and withdrawals.
Skrill was once a powerhouse in the financial market of the UK. However, they began to get complaints in their cryptocurrency departments that stated users were having their digital wallets hacked and stolen.
To make matters worse the Skrill USA received a B- rating from the Better Business Bureau. The exchange from skrill (the Skrill coin) to Bitcoin also met with resistance because the block-chain failed to authorize transfers.
Skrill reports that the issues have been resolved, but most users are still wary of doing too much business with them. Mining has dropped and the price point is not what it used to be. Skrill is still the largest digital wallet provider in the world, despite their setbacks.
LiteCoin was started in 2011 by an ex-Google employee. The process was developed using the Bitcoin core and provides a decentralized cryptocurrency and mining using an open source license.
LiteCoin made a name for itself by creating the Lightening Network which completed it’s first transaction from Zurich to San Fransisco in less than one second. Now LiteCoin is on of the top five contenders for the cryptocurrency craze and more coins (called lites) are mined every day. The cap isn’t expected to be reached any time soon, though and more miners are getting involved to take advantage of the large ceiling.
When getting into cryptocurrency you should always check your resources, do your due diligence and ensure that the company you go with has a reputation for privacy, genuine support and the ability to perform.
Bitcoin is still the number one cryptocurrency available, but there are others that are fast approaching the milestones set by Bitcoin. With new technologies and block-chains appearing constantly, it won’t be long before cryptocurrency and digital wallets are a part of our everyday lives.