What Is Cryptocurrency?

what is cryptocurrency

A cryptocurrency is a digital asset or digital form of money. Cryptocurrencies play a variety of roles on a blockchain network. They leverage cryptography to verify and secure transactions. (Cryptography is the study of hiding information.)

Cryptocurrencies are innovative in many ways. One key innovation is the peer-to-peer nature of cryptocurrency, which makes it possible to send and receive value without having to trust a third party such as a bank or payments processor (e.g. Visa, Mastercard). This makes cryptocurrency similar to physical cash, except for the fact that cryptocurrencies are entirely digital.

What Is Bitcoin?

Bitcoin is the world’s most well-known and widely used cryptocurrency. It’s an essential part of the Bitcoin blockchain network. If you removed the bitcoin cryptocurrency from Bitcoin, the network would break down. You’ll often see investors and traders refer to bitcoin by its ticker symbol: BTC.

People use bitcoin to store and transmit value among other participants in the Bitcoin network, no matter where they are in the world. To maintain scarcity, there’ll never be more than 21 million bitcoins issued. The final bitcoin is expected to be mined in 2140. (Cryptocurrency mining is the process of solving math puzzles.)

The identity of Bitcoin’s creator is unknown. They go by the pseudonym Satoshi Nakamoto—which could be a man, woman or group of people. Satoshi published the Bitcoin whitepaper in October 2008. Then, after years of being active on online forums with early Bitcoin enthusiasts, Satoshi said in April 2011 that they had “moved on to other things.” To this day, that remains Satoshi’s final post.

READ: What Is Bitcoin?

What Is Ethereum?

Ethereum is an open-source, decentralised computing infrastructure. It uses blockchain technology to synchronise and store changes in state.

The cryptocurrency native to Ethereum is ether. It is integral to Ethereum. Just as bitcoin is to Bitcoin. The ticker symbol for ether is ‘ETH’.

Ethereum’s whitepaper was published in November 2013 by computer programmer Vitalik Buterin. After being built by Buterin and other developers, the first Ethereum block was mined in July 2015.

Ethereum is best known for supporting smart contracts. (Smart contracts are bits of code that perform a set of instructions.) Although Bitcoin supports smart contracts, Ethereum lets developers use them in a lot more ways. How? Thanks to the Ethereum Virtual Machine (EVM), an environment where smart contracts live and interact.

In the early 2020s, the Ethereum blockchain will be undergoing a major redesign. The result will be Ethereum 2.0, a blockchain that will be able to deal with a lot more transactions. For more on Ethereum 2.0, watch the below video by Nugget’s News founder Alex Saunders.

How Many Cryptocurrencies Exist?

There are thousands of cryptocurrencies in existence. By far, bitcoin (BTC) and ether (ETH) are the cryptocurrencies that lead the way in terms of market value and mindshare.

READ: What Is Blockchain Technology?

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