The advent of cryptocurrency is already part of our daily transactions. Cryptocurrency is a digital asset that exists in the crypto world, and many call it “digital gold”. But what is cryptocurrency really? You are probably interested.
It is a digital asset designed for use as a medium of exchange. Obviously, this is a close substitute for money. However, it uses strong cryptography to secure financial transactions, to verify asset transfers and to control the creation of additional blocks. All cryptocurrency is a virtual currency, a digital currency or an alternative currency. It should be noted that all cryptocurrencies use a decentralized control system as opposed to the centralized systems of banks and other financial institutions. These decentralized systems operate through distributed book technology that serves a public financial database. A blockchain is commonly used.
What is a blockchain?
This is an ever-growing list of records that are linked and protected by cryptography. This list is called blocks. The Chain of Blocks is an open distributed book that can be used to record transactions between two parties in a way that can be checked and constantly. In order for the block to be used as a distributed book, it is managed by a peer-to-peer network that together follows a protocol to test new blocks. Once the data is recorded in any book, it cannot be changed without changing all the other blocks. Thus, blockchains are secure in their design and also serve as an example of a distributed computing system.
History of cryptography
David Chaum, an American cryptographer, discovered anonymous cryptographic electronic money called ecash. It happened in 1983. In 1995, David implemented this through Digicash. Digicash was an early form of cryptographic electronic payments that required custom software to withdraw banknotes. It also allowed you to specify certain encrypted keys before sending to the recipient. This feature allowed the digital currency not to be tracked by governments, issuing banks or any third party.
After intensifying efforts in the following years in 2009 Bitcoin was created. It was the first decentralized cryptocurrency created by Satoshi Nakamoto, a developer under a pseudonym. Bitcoin used SHA-256 (proof of work scheme) as a cryptographic hash function. The following cryptocurrencies were also issued from the issue of bitcoin.
1. Namecoin (April 2011)
2. Litecoin (October 2011)
3. Peercoin
These three coins and many others are called altcoins. The term is used to refer to alternatives to bitcoin or just other cryptocurrencies.
It should also be noted that the exchange of cryptocurrencies is carried out via the Internet. This means that their use occurs primarily outside banking systems and other government agencies. Cryptocurrency exchanges involve exchanging cryptocurrencies with other assets or other digital currencies. Ordinary fiat money is an example of an asset that can be traded using cryptocurrency.
Atomic swaps
They refer to the proposed mechanism under which one cryptocurrency can be exchanged directly with another cryptocurrency. This means that nuclear swaps do not require the participation of a third party in the exchange.