As an informed investor, you need to understand what cryptocurrencies are, and how they continue to alter the financial sector globally. At their core, cryptocurrencies are internet-based decentralized mediums of exchange. These unique financial instruments differ from traditional fiat currencies in some key ways.
Unlike, say the US dollar, cryptocurrency issuance and transactions aren’t controlled by a central organization. Instead, a group of computers known as a blockchain all work together to secure and operate the network. Consequently, this makes blockchain networks far safer than traditional systems because there is no centralized attack vector.
Importantly, blockchain technology provides a more secure and efficient market experience. It’s both immutable and unalterable. These attributes make it ideal for peer-to-peer transactions.
In this way, cryptocurrencies provided the world with one of the first successful alternatives to government-backed currencies. In the case of cryptos, such as Bitcoin, a combination of private and public keys enables p2P cryptographic transactions via a distributed ledger.
The History of Cryptocurrencies
The history of cryptocurrencies starts in 1998. At that time, the internet was gaining popularity. However, it would still be nearly almost half a decade before high-speed became popular. Interestingly, it’s recorded that a computer engineer by the name of Wei Dai first introduced the concept of cryptocurrencies via his B-money concept. In the paper, he proposed a digital form of money that utilized a privacy protocol to create an anonymous cash system.
Later in the year, another, now well-known programmer by the name of Nick Szabo introduced the BitGold concept. Szabo felt that decentralization needed to be at the core of any digital currency to prevent centralized manipulation. Sadly, neither of the projects made it to the market. However, they did inspire the infamous…