Understanding Crypto-Currency

 

In 1983, a research paper by David Chaum introduced the idea of digital cash. In 1990, he founded DigiCash, an electronic cash company, in Amsterdam to commercialize the ideas in his research.  Understanding Crypto-Currency.

In 1997, Coca-Cola offered to buy from vending machines using mobile payments. After that PayPal emerged in 1998. Another system such as e-gold followed suit but faced issues because it was used by criminals and was raided by US Feds in 2005. In 2008, Bitcoin was introduced, which marked the start of Digital currencies becoming the most widely used and accepted the digital currency.
Digital currency or digital money or electronic money is distinct from physical (such as banknotes and coins), known as fiat currency. It exhibits properties similar to physical currencies but allows for instantaneous transactions and borderless transfer-of-ownership. Examples include virtual currencies and crypto-currencies. Like traditional money, these currencies may be used to buy physical goods and services, but may also be restricted to certain communities such as for use inside an online game or social network.
Digital currency is a money balance recorded electronically on a stored-value card or other devices. Another form of electronic money is network money, allowing the transfer of value on computer networks, particularly the Internet. Electronic money is also a claim on a private bank or other financial institution such as bank deposits.
Digital money can either be centralized, where there is a central point of control over the money supply, or decentralized, where the control over the money supply can come from various sources.

A number of electronic money systems use contactless payment transfer in order to facilitate easy payment and give the payee more confidence in not letting go of their electronic wallet during the transaction.

A crypto-currency is a type of digital token that relies on cryptography for chaining together digital signatures of token transfers, peer-to-peer networking, and decentralization.

In some cases, a proof-of-work scheme is used to create and manage the currency.

Types of Crypto-Currency

Crypto-currencies allow electronic money systems to be decentralized, systems include:

Bitcoin, a peer-to-peer electronic monetary system based on cryptography. Ethereum itself is a platform for decentralized applications, meaning that instead of talking to one central server, clients talk to each other. Litecoin, originally based on the Bitcoin protocol, intended to improve upon its alleged inefficiencies. Ripple monetary system, a monetary system based on trust networks. Dogecoin, a Litecoin-derived system meant by its author to reach broader demographics.
Next, conceived as a flexible platform to build applications and financial services around.
Monero, an open source crypto-currency created in April 2014 that focuses on privacy, decentralization, and scalability.

Mining for Crypto-Currency

If you’ve ever wondered where virtual coins come from and how they go into circulation, the answer is that they get “mined” into existence. Crypto-currency miners use special software to solve math problems and are issued a certain number of coins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.

These miners help keep crypto-currency networks secure by approving transactions. Mining is an important and integral part of crypto-currency that ensures fairness while keeping the networks stable, safe and secure.

Crypto Gold Mining results for BTC, ETH and LTC

Mining serves to both add transactions to the blockchain and to release new coins. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The first participant who solves the puzzle gets to place the next block on the blockchain and claim the rewards. The rewards incentivize mining and include both the transaction fees (paid to the miner in the form of the coin) as well as the newly released coin.

Crypto-currency mining is decentralized. Anyone with an internet connection and the proper hardware can participate. The security of the various networks depends on this decentralization since the networks make decisions based on consensus. If there is disagreement about whether a block should be included in the blockchain, the decision is effectively made by a simple majority consensus, that is if greater than half of the mining power agrees.

The amount of new coin released with each mined block is called the block reward. The block reward is halved at pre-determined intervals, or “blocks”, roughly every four years.

This diminishing block reward will result in a total release of a currency that at a certain maximum number of coins. According to current Bitcoin protocol, 21 million is the cap and no more will be mined after that number has been attained. Other currencies have different caps but work on the same principle.

Mining Technologies

Anyone with access to the internet and suitable hardware can participate in mining. In the earliest days of Bitcoin, mining was done with CPUs from normal desktop computers. Graphics cards, or graphics processing units (GPUs), are more effective at mining than CPUs and as Bitcoin gained popularity, GPUs became dominant.

Eventually, hardware GPUs were supplemented by the addition of an ASIC (which stands for Application-Specific Integrated Circuit) and was designed specifically for mining Bitcoin. The first ones were released in 2013 and have been improved upon since, with more efficient designs coming to market.

Today, mining is so advanced, it can be done very profitably with the latest ASICs. The main operational costs for miners are the hardware and the electricity cost, both for running the miners but also for providing adequate cooling and ventilation. Most crypto-currencies that are mined by computers use a “proof of work” algorithm, designed to make them prove that they have invested the computing power in producing the coins. Bitcoin uses SHA-256, but many alternative coins (such as Altcoins) use another system, called Script.
Source: crypto gold.so

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