A Cryptocurrency, cryptosystem, or cryptocoin is a group of computer code that is designed to function as a payment medium that tracks private computer coin ownership information. It is designed with a specific purpose in mind: to provide a platform by which monetary value is transferable without the use of a third party intermediary. Transactions made through this medium are secured by mathematical proof instead of the conventional secure key system. The proof required is not something that can be compromised, unlike what happens with traditional systems of key management and secure computer networks.
One characteristic that is shared by all cryptosystems is that they are designed to have a system of public-key cryptography, also called public-key infrastructure, which keeps critical information about transactions that are made confidential. By doing so, it prevents hacking, theft, and fraud that can result in inaccurate public perception of the value of certain currencies. All of the major currencies that are used as an alternative to the US dollar have one form of public-key cryptography, which was created by cryptographic groups such as cryptographic institute P cryptography and Electronic Transactions Laboratory (ETL), which are funded by the National Security Agency (NSA).
There are different forms of decentralized computing which include Litecoin and Namecoin. Both of these coins have different underlying purposes that are geared towards different uses for decentralized networks. With Litecoin, for instance, its main purpose is to be a Litecoin proxy in order for users to transact and use Litecoin while being protected from the risk of Litecoin abuse, such as spending outside of the Litecoin network. Namecoin, on the other hand, is used more like a common internet currency because it makes transactions easy and allows for easy conversion between different currencies.
One popular use for cryptosystems that work on a decentralized basis is smart contract technology, also known as a crowdsourced web programming language. One example of such a system is the Evernym project, which provides users with the ability to create their own customized zero knowledge smart contracts. The contracts are executed using a digital asset called an ‘asset’ or a’security’ for that contract. Asset systems can be decentralized like the Evernym system or they can be more specific, such as having a digital asset which can be programmed by owners through a browser. This digital asset is called a ‘virtual server’ and once programmed, it becomes a part of the network.
Another popular decentralized scheme is the Tezos platform, which aims to replace the existing world currency with a newICO ( cryptocoins) that will be based on a proof-of-work technology called ‘proof of stake’. By investing in the platform owners will be able to’stake’ their properties for the benefit of other investors. This system aims to provide a platform for investing in an open-source project that will act as the backing for the tokens that will be distributed on a decaliod scale.
There are several upcoming decentralized schemes that are currently in development. One such project is called MaidSafe, which is building a software tool that will allow investors to participate in digital currency markets without having to have their own funds. Investors will be able to use the MaidSafe Platform to execute transactions, and will be rewarded with digital tokens (MAST) once their investments pay off. On the other hand, another upcoming project named Status is developing a new digital currency protocol and associated software for etherium.