Cryptocurrency and The Future - Steemit Crypto Academy Season 5 - Homework Post for Task 5.
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(1) What Is Cryptocurrency and How You Would Like To See Cryptocurrency In The Future
The word Cryptocurrency can be splited into two component words, namely; Crypto and Currency. The word Currency is a word of common knowledge and it is often used daily especially in the business and commerce. A currency is an officially accepted valuable tender of payment in commerce. It is accepted for exchange of value. The word Crypto can be completed with an extension as Cryptography.
Cryptography is a system of secured transmission of information. This involves an encryption of the original text to which it can only be readable to the intended end. This rule out any form of interference or manipulation of data. The cryptography is the form of security around Cryptocurrency making it a secure digital spendable currency. Cryptocurrency functions exactly as the traditional currency when it comes to being spent as an exchange for value but unidentically distinct with features such Digital, Cryptographic security, Decentralization
Digital, Cryptographic security, Decentralization are the bedrock of the Technology behind Cryptocurrency which is known as Blockchain. Cryptocurrency was founded on the Blockchain technology which is a system with series of blocks that are connected end to end. The Blockchain is known to be a secured public leger where information of transaction are stored. This information is store in individual block which serve as a page of the leger book with a known capacity of entries. The block is filled, approved and then published to the network to be seen by the public. Each block is numbered and has a form of Identification known as Hash and then linked up to a previously existing block.
The Blockchain is secured by a form of cryptographic entries such as hashing and cryptographic Keys. The hashing is is the algorithm function that secures the network while the Cryptographic keys are used for encryption and decryption of data. The cryptographic key is made up of a Public Key which serves as address on the blockchain and a Private Key which is used to sign transaction to their corresponding public key.
The Public and Private Keys are very important at the user end, especially how they are kept secured. As the names implies the public key is made known to public and this forms the address while the private key is secured and kept secretly. For example, you receive and deposit Cryptocurrency to your wallet address (public key), whereas you can only use the private key to access the fund associated with the public key.
The Digitalization of Cryptocurrencies simply states that they do not exist physically but electronically. They are only created, stored and spent electronically. The Blockchain network itself exist electronically.
The Decentralization of Cryptocurrencies or the Blockchain entirely defines it as a technology without the control of a central authority. On the Blockchain network, the decision making and control is done by the participants of the network and not a central authority. This type of system is also known as Peer to Peer System. This decentralization makes it immune to a central governance, manipulation, regulation and censorship. The participants of the Blockchain are called Nodes. These are computers that stores a copy of what is published on the network because these information is not stored on a Central server. This feature made blockchain data immutable and a cryptocurrency cannot be double spent.
Mechanism of Agreement in Decentralization of Cryptocurrencies
These nodes also participate in Concensus Mechanism underlying the network. The Concensus mechanism is a mechanism that is used to achieve agreement among nodes on a value of data or state of the network. Due to decentralization containing many participants in governance, there is need for algorithm that easily and speedily push towards agreement among nodes. There are several concurrently existing consensus mechanism such as Proof of work (POW), Proof of stake (POS), Delegated Proof of Stake (DPOS), Proof of Brain, Stellar Concensus Protocol (SCP), Proof of Weight, Proof of Authority (POA), Proof of Elapsed Time, Proof of Burn (POB), Byzantine Fault Tolerance, RAFT, Proof of Capacity and so on.
The first known Blockchain network is the Bitcoin network which house the first and the most common cryptocurrency. Other networks have been created since then to mimic or upgrade the deficient function of the Bitcoin Network. Such networks include Ethereum, Tron, Steem, Litecoin, EOS, Tezos, Multichain and so on.
Cryptocurrencies called Altcoins
Cryptocurrency was first created as bitcoin in 2009 an it success has spawned the creation of daughter cryptocurrencies which are known as Altcoins. Altcoins refers to other cryptocurrencies other than Bitcoin. Many of these altcoins were built with a similar purpose as bitcoin while some are created to solve a different problem entirely. There are over 14,000 Altcoins listed according to Coinmarketcap and the number continue to increase daily.
Cryptocurrencies are created in different ways, such as ;
Mining Based: these are tokens that are created by performing a mining task to add such cryptocurrency to supply. An example of this type of token is the Bitcoin others include Litecoin, Zcash, Dash, Monero, Dogecoin and so on.
Initial Coin Offering: This involves the distribution of a massive amount of token to public before they are list. Examples of coins that were created in this manner include Ethereum, DAO, Augur, Waves, Golem and so on.
Where Cryptocurrencies are Stored
Cryptocurrencies are stored in Wallets while they are traded on Exchanges. Technically, cryptocurrencies are not stored anywhere other than the blockchain but to make it user adaptable, these cryptocurrencies are managed using Crypto Wallets. These wallet stores the public keys for the Cryptocurrency account to make it easily accessible to make transactions. However, a successful transaction is determined by the provision of the right private. Some of the wallet are in form of hardware devices known as Cold wallets e.g Ledger, Trezor; whereas some are internet or software based which are Hot Wallets e.g Metamask, Trustwallet.
Exchanges are platforms where cryptocurrencies can be exchanged for fiat or other cryptocurrencies. It serves as a maket place for cryptocurrency holders where Buyers meet sellers of a defined Cryptocurrency asset or pairs. These exchanges are either structured to be Centralised where the private keys are held in custody of a trusted crypto broker or decentralized where the trader have full custody of his private keys and trade peer to peer without being overseen by a third party.
How You Would Like To See Cryptocurrency In The Future?
The blockchain technology are now widely accepted in different sectors of the global economy with different and unique applications. To take this technology from its infancy to a stage of maturity, developers and researchers are working tirelessly to bring out the best of it for the future. The future of the blockchain technology would be an uncontroversial global acceptance which is probably feasible.
The blockchain technology has what these industry needs or would say what the global populace needs. Its Decentralization, Fast accessibility, Transparency, Security and Identity management is a solution to problems plaguing many industry of the world.
some of these solutions are now being applied in areas such as Industrial Supply Chain. The Blockchain has been adopted to monitor and manage an accurate record of supply such as participats identity, Credibility, Quality Certification, Price, Time, Location and other relevances in commercial supply chain. This technology would better satisfy transparency and traceability.
Financial activities are currently being boosted by the Blockchain technology thereby clipping out third party regimentation and taskful paperworks. International transactions are now being concluded in seconds and digital forms of national currencies are now being transferred cross-country without restrictions or delay.
The Healthcare sector has also adopted this technology in creating a secure and immutable records of patients. This Advances being incorporated in digital health has enabled a secured and verifiable network between the patients an healthcare professionals. Supply of medications, medical equipments, blood units and samples can be managed as well as easily traceability of disease conditions in public health and bioinformatics. Insurance, lending, Investments, Gaming, Gambling, Artifacts, Entertainment are also currently enjoying new feats with the Blockchain technology. However, the future would be to have a global acceptance of the Blockchain.
Best Regards!!
