To answer the question, we need to know:
-What is cryptocurrency?
-What is Bitcoin?
-What is the block chain?
What is cryptocurrency?
The emergence of the cryptocurrency market is the culmination of decades of research in cryptography, computer science, and economics.
Crypto currency is a digital asset designed to work as a medium of exchange that uses cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
Bitcoin was created in 2009 by Satoshi Nakamoto with an intention to produce a currency independent of any central authority.
It’s generally considered safe or more reliable than other forms of payment because it does not depend on centralized entities like banks.
The most important thing that you should know about crypto currencies is that unlike fiat currency, it is not backed by any government nor does it have a physical representation. A crypto currency relies on its own network for its circulation.
Crypto currencies are also called virtual currencies, because they are not regulated by any government. They are decentralized and are created in order to exchange money without any intermediaries or banks.
How it works:
A cryptocurrency wallet stores the public and private keys which can be used to receive or spend the cryptocurrency. Cryptocurrencies are not printed like dollars or euros—they are mined from blocks of data which contain cryptographic hash functions—long strings of letters and numbers that function like a puzzle that needs to be solved.
Mining cryptocurrencies is a process of solving complex mathematical equations to release blocks and earn coins. The process requires a lot of computing power and energy. If you want to mine crypto but don’t have enough processing power, an option is to join a mining pool which will distribute the workload and increase the chance of reward.
The first step is to choose an appropriate mining pool that best fits your needs such as location, price, cost-effectiveness, and size. They can be either public pools which anyone can join or private pools which require permission from the owner. Next, you need to create an account with the mining pool provider and install their software on your computer(s) or cloud rigs. Finally, you need to set up your miner with the correct settings for each coin type
What is Bitcoin?
Bitcoin is a decentralized digital currency. It is the most famous example of a public blockchain system. Bitcoin can be used to buy things electronically, and also as an investment, a store of value, or a method of payment for goods and services.
Bitcoin was invented in 2009 by Satoshi Nakamoto. It is an open source project with no single person in control. Bitcoins are created through this process called mining which consists of solving complex math problems with specialized computers or GPUs (graphics cards).
The network is maintained by the miners who each take turns collecting transactions into blocks, validating them and adding them to the public ledger known as the blockchain while also collecting new bitcoins in the process. This process serves to confirm that all transactions that take place are valid and that nobody can create.
What is the block chain?
Blockchain is a decentralized ledger that stores data across a network of computers. It has been around since the inception of Bitcoin in 2008 and has since been adopted by many industries for use in their transactions.
The blockchain technology is transparent, incorruptible, and highly resistant to outages. As a result, it has been used so far to authenticate digital currencies such as Bitcoin and Ethereum with success. Blockchain’s potential use is not limited to finance – it can also be applied to logistic businesses, supply chains, medical records – the list is virtually endless!
There are three types of blockchains: public blockchains, private blockchains, and consortium blockchains. In public blockchains all the nodes have equal rights to read and write data. It is also possible for anyone to join the network as a node or computer system that can read or write information into blocks in that chain. This type if blockchain is usually associated with cryptocurrencies like Bitcoin and Ethereum which are open networks where anyone can participate in.
For a detailed explanation on the crypto and the blockchain (if you are into detail) view this video from the absolutely fantastic channel 3Blue1Brown
The future of crypto?
Following the terrible so-called crypto winter that began in 2018, bitcoin and cryptocurrencies have experienced a massive comeback in the recent year.
This year, the bitcoin price has risen to never-before-seen highs, hitting $60,000 per bitcoin before dropping somewhat. Other smaller cryptocurrencies have grown much faster than bitcoin, with several achieving thousands of percent increases.
As bitcoin and cryptocurrencies continue to establish a place in the investor market, computer experts have warned that advances in quantum computing may mean the encryption that underpins bitcoin is compromised as early as 2026. Our entire banking system as it currently stands is build upon encryption, and particularly factorisation of very large prime numbers. The encryption relies upon how fantastically difficult it is to brute force calculate the two prime factors of an incredibly large number. It would take a classical computer 100s of trillions of years to break current 2048 bit RSA encryption. So, it’s not that it’s impossible to crack the encryption but rather than by the time it’s been broken the Milky Way galaxy will no longer exist and many will have bene created and died also.
However, quantum computers cast a shadow over how safe this encryption will be in even 10 years time as their power comes from how quickly they can solve very very very hard problems.
But herein lies cryptos potential saviour. If “the powers at be” can show that they have insulated crypto currency against the risk of the encryption being broken by quantum computers by quantum computers themselves then that blockchain company would become a very safe and lucrative bet.
View our youtube presentation of this blog post below