WHAT IS CRYPTOCURRENCY ???

 Today cryptocurrencies have become a global phenomenon known by most people

but understood by few in 2021 you'll have a hard time finding a major

bank accounting firm software company or government that hasn't researched crypto

currencies or started a blockchain project beyond the noise in the press

releases many people often fail to understand the basic concepts so let's

walk through the whole story what are crypto currencies.

Satoshi invented Bitcoin in 2008 as a peer-to-peer electronic cash system to

realize digital cash you need a payment network with account balances and

transactions that's easy to understand one major problem every payment network

has to solve is to prevent double spending that is to prevent one entity

from spending the same amount twice usually this is done by a central server

who keeps records of all the balances in a decentralized network you don't have

this server so you need every single entity of the network to do this job

every peer in the network needs to have a full list with all the transactions to

check if future transactions are valid or an attempt to double spend but how

can these entities. keep it consensus about these records if the peers on the

network disagree about one single minor balance everything breaks they need

absolute consensus nobody knew how to achieve this until Sato she proved it

was possible cryptocurrencies are a key part of the solution.

To illustrate this we'll look at the transactions on the network the

transaction is a file that says Bob gives X Bitcoin to Alice and assigned

digitally by Bob once signed the transaction is broadcasted to the

network sent from one peer to every other peer this is standard p2p

technology nothing special happening here after a specific amount of time the transaction gets confirmed only miners can confirm transactions this is their job in a

cryptocurrency network they take transactions stamp them as legitimate

and spread them in the network after a transaction is confirmed by a miner

every node has to add it to its database it has to become part of the blockchain

for this job the miners are rewarded with cryptocurrency.

For example bitcoins anybody can be a miner they just need to use some of their computers power to qualify for the task every miner competes to solve a cryptographic puzzle after finding a solution a miner can confirm the transaction and add it to

the blockchain as an incentive to do this they then receive a payment from

the network in the form of a cryptocurrency in this way a network

of independent actors are economically incentivized to maintain the legitimacy

of the transaction history so that's the gist of it crypto currencies are the key

to the complex digital cash problem.

Satoshi solved how to maintain integrity and consensus across independent and potentially malicious actors cryptocurrencies are essentially the monetary incentive offered to anyone willing to keep the network secure.