Cryptocurrency

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Cryptocurrency

[Cryptocurrency] — is a type of digital currency, the issuing and accounting of which are based on cryptographic methods, for example, the Proof-of-work protection method and asymmetric encryption, and the system functions decentrally in a distributed computer network.

In case of cryptocurrency it is impossible to cancel or return the funds sent to the recipient, but there are opportunities for transactions involving the intermediary, when the consent of all three or any two parties is required to complete or cancel the transaction, the funds cannot be forcibly frozen or recovered without access to the owner's private key, although the parties of the transaction may voluntarily temporarily block their funds as collateral.

As a rule, there is an upper limit to the total volume of issuing. However, some cryptocurrencies do not have a fixed upper limit for the total volume of issuing and both emission due to available savings and demission by mandatory destruction of a small fixed amount in each transaction are possible.

All currently existing cryptocurrencies are used pseudonymously - all transactions are public, but there is no default binding to a particular person, although the user's identity can be established if the necessary additional information is known.

History[edit]

Cryptography for the purpose of confidential payments began to be used since 1990 in the DigiCash system of David Chom, whose company became bankrupt in 1998. However, his payment system was centralized, and the term "crypto-currency" was used for the first time after the appearance of the Bitcoin payment system, which was developed in 2009 by a person or a group of individuals under the pseudonym of Satoshi Nakamoto, and has used SHA-256 hashing and a Proof-of-work system.

Later, other Bitcoin-independent cryptocurrencies used by Bitcoin forks appeared: Namecoin (decentralized DNS using a cryptocurrency of the same name for registering internal .bit domains), Litecoin (uses Scrypt hashing, the upper limit of total issuing is increased, time for confirmation of transaction is reduced), PPCoin (uses a hybrid proof-of-work/proof-of-stake mechanism, does not have an upper limit for the total volume of issuing), Novacoin (similar to PPCoin, but uses scrypt and the emission-related factors are reduced). Also, many other forks were created.

How to buy a cryptocurrency[edit]

Before buying a cryptocurrency, you need to create a wallet. There are many wallets that vary in the currencies that can be stored in these wallets. Each cryptocurrency has its own wallet. They can be downloaded on the appropriate sites. For example, a large range of wallets for various devices from PC to a smartphone with various operating systems for bitcoins is available in https://bitcoin.org, at https://ethereum.org/ - for the Ethereum. Such wallets are suitable for storing several coins without the possibility of exchanging them for other cryptocurrencies, for which it is necessary to open a new wallet.

However, you can open a "multi-walet" that is suitable for different currencies at the same time. For a new comer, the best way is to do it on a cryptocurrecny exchange site, or online exchange. The most authoritative exchange sites are

and a list of all online exchanges is available at

On such sites it is possible to buy, sell or exchange a currency conveniently. This type of wallet is most often used for ordinary people who just want to buy some coins, make purchases on the Internet, gamble or invest in them for a while.

To protect your money, all you need is to create a unique and complex password, because the above listed sites have strong enough protection. Regardless of what type of wallet was opened, it has its own unique address, to which the purchased coins will be sent.

Criticism[edit]

  • The developer of the Bitcoin client, Gavin Andrisen expressed concern about the fact that some cryptocurrencies may be fraudulent
  • The Central Bank of Russia warned citizens not to use the Bitcoin cryptocurrency.

See also[edit]