The Basics of Cryptocurrencies
It seems as though everyone is talking about cryptocurrencies these days, but the fact remains that the majority of people don’t really know what they are. All the time you hear comments like, “You’re into that Bitcoin thing, aren’t you?” or, “It’s not real money though, is it?”
Well, I’m going to try and combat this by writing a series of blog posts explaining (almost) exactly what cryptocurrencies are, how to get your hands on some, and, perhaps most importantly, how you can use them to make money. Because let’s face it, that’s why most of us are interested in these things, right?
Put simply (ish), a cryptocurrency is a medium of exchange just like any other currency (Pound Sterling, US Dollar, etc.), but is designed to exist solely in the digital world. Cryptography is used to secure transactions between users, and to create new coins; that’s where the name comes from. Perhaps one of the biggest drivers of these currencies is the fact that (for the most part) they are completely decentralised, i.e. their creation and distribution is not controlled by any government or central body.
In even simpler terms…
They are digital currencies.
Introduction to Bitcoin and Altcoins
The first ever cryptocurrency, and perhaps the one most people know about, is Bitcoin. It was started in late 2008 as a “Peer-to-Peer Electronic Cash System” by a mysterious developer going by the name of Satoshi Nakamoto, and went on to become the pioneer of the cryptocurrency movement.
The next was Namecoin; the first ‘Altcoin‘ – a term to describe any cryptocurrency that isn’t Bitcoin – developed in April 2011 as a way of making internet censorship more difficult. Then came Litecoin in October 2011, then Peercoin in 2012, followed by the infamous Dogecoin in 2013. Today, there are over 800 cryptocurrencies, and that number is growing.
Currently, Bitcoin is still the largest and most valuable of the cryptocurrencies (valued at a staggering $1763.65 at the time of writing), but that might not last forever. As the underlying technology advances, Bitcoin could be left behind by newer and more feature-rich altcoins.
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