A cryptocurrency is a digital asset, whose primary function is to act as a value exchange mechanism within a peer-to-peer economic system that uses cryptocurrency to verify and ensure transactions and control the creation of additional units.
Unlike centralized banking systems, most cryptocurrencies are decentralized thanks to a computer network deployed all over the world, also known as nodes. Anyone with Internet, or even access through Weak-Signal Radio, can exchange value through continents by a single click.
The cost of transactions by cryptocurrency is low compared to intercontinental bank transfers, and transactions are irreversible unlike what happens with reimbursements allowed by credit card companies. The emission and management of the units of the cryptocurrency is determined by the architecture of the network, which is based on programmed algorithms and cryptographic tests.
These can be considered a set of predefined rules, also known as protocol, which determine how the cryptocurrency system operates. That are decentralized means that cryptocurrency can not be controlled by a single entity and that transactions can be produced directly between users, without depending on a third party acting as an intermediary.
However, many cryptocurrencies are managed and developed by private companies and foundations, so there are varied degrees of decentralization. Depending on the structure of the network and the distribution of the nodes, some cryptocurrencies can be considered more decentralized than others.
The first decentralized cryptocurrency, Bitcoin, was created in 2009 by a developer under the pseudonym Satoshi Nakamoto.
The fundamental idea was to create an independent and decentralized electronic payments system based on mathematical tests and cryptography.
Like most cryptocurrencies, Bitcoin has a tap monetary mass, which means that the system will not generate more bitcoin units once the pre-established limit is reached. Generally, the total monetary mass is usually a public information that is defined when the cryptocurrency is created. Apart from Bitcoin, nowadays there are around a thousand different cryptocurrencies, also called Altcoins or alternative coins. All with different properties and use cases.
The central component of most cryptocurrency is a technology called Blockchain. The Blockchain consists of a linear chain of multiple chained and cryptographically insured blocks.
Each block contains, among other things, a list of recent transactions and a reference to the immediately previous block.
The Blockchain is responsible for maintaining a permanent record of all confirmed transactions, functioning as a decentralized digital accounting book. This accounting book is distributed among all the nodes of the network, making it highly resistant to changes.
Blockchain transactions are subjected to be recorded and distributed, they can be viewed anytime by anyone with blockchain explorers giving real transparency and Immutable ledgers. Blockchain technology is currently widely adapted and preferred by leading technology giants as well as government institutions. Blockchain is ideal for security, trust and accessibility, providing better efficiencies to projects and firms.
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