Cryptocurrency, like any other form of money, is a concept that has been around for centuries. Historically, cryptosystems have been used by pirates to track gold and silver from ship to ship. However, with the advent of new technologies and more secure methods of securing valuable items, the idea of cryptosystems has taken on a whole new meaning. The word “crypto” comes from the Greek words “cryptos” meaning secret and “kristos” meaning coins.
A cryptocoin, also known as a digital currency, is a group of computer languages and protocols that are used to specify the behavior of a decentralized system. A decentralized system is one in which the ledger and its transaction records are kept confidential and protected from outside influences. A typical cryptocoin would include such features as Open Ledger Protocol (OLP), Kerckhoffs BIP, and Byzantine Fault Tolerance ( Buchta). As the name suggests, a cryptocoin is governed by a centralized ledger that is accessible to all participants, but may be delayed, or otherwise unavailable, to some users.
The most popular form of a cryptocoin is the fiat standard. This involves a government issuing a fiat currency backed up by an asset, usually a debt, such as a government guaranteed loan or gold. Fiat standard coins are regularly called “fiat money”, since their value is not tied to any physical commodity. There are three types of Fiat Standard, they are the notes secured by actual commodities, the coins secured by securities, and digital currencies which have no physical existence. Digital currencies are usually referred to as “digital tokens”.
Unlike conventional systems which record transaction data and account balances, cryptosystems ensure that only the owner of a digital asset can make changes to the ledger and transaction records. The major advantage of a decentralized system over a conventional system is that anyone can participate in the decentralized ledger. An additional advantage of cryptosystems is that it is mathematically simpler for multiple users than a traditional account ledger. Cryptocurrencies also provide users greater control over their own personal information because it is controlled by the user, rather than the service provider. In particular, users can set their own privacy rules, making it impossible for any entity to have access to all the properties.
What are the typical uses for cryptosystems? Many people use cryptosystems to buy and sell products online without using a traditional currency. Some examples include Web Mall, Playpens and Mobilepay. You may also hear about other applications like remortgaging, free market trading, and rent to own properties being offered by some companies. As you can see, there are a wide variety of uses for cryptosystems, and they are only going to grow in popularity as time goes by.
So how do you get started with the exciting world of cryptosystems? Fortunately, there are a number of great programs that allow you to test out some of the most popular currencies and blockchains today. Some of these programs are open source, meaning that you don’t need to spend any money on software to get started. If you want to learn more about the benefits of investing in cryptosystems, visit the Coiled Banking blog. Or perhaps contact a professional who can help you explore the options available to you today.