In short, cryptocurrency is a digital asset used as a form of payment and transaction. The first emergence of cryptocurrency technology came in 2009 when a pseudonymous developer named Satoshi Nakamoto created Bitcoin, the world’s first decentralized cryptocurrency intended to be a Peer-to-Peer Electronic Cash System.
What allowed Bitcoin to gain its traction was its uniqueness of being completely unregulated and completely decentralized. There is no national bank or national mint, and there is no depositor insurance coverage. The currency itself is self-contained, meaning that there is no precious metal behind the bitcoins; the value of each bitcoin resides within each bitcoin itself. Cryptocurrency wallets don’t have a spending and withdrawal limits imposed on them, and the wallets cannot be seized, frozen or audited by banks and law enforcement. For all intents and purposes: nobody but the owner of the bitcoin wallet decides how their wealth will be managed.
In order for cryptocurrencies to work, developers use cryptographic protocols and extremely complex code systems that encrypt sensitive data transfers to secure their units of exchange. Developers build these protocols on advanced mathematical and computer engineering principles that render them virtually impossible to break, thus protected from duplicating or counterfeiting the currencies. These protocols also mask the identities of cryptocurrency users, making transactions and fund flows difficult to attribute to a specific individual or group.
To obtain cryptocurrencies, you can either buy them or mine them. Mining is essentially allowing your computer to solve computationally-intensive math problems where each math problem has a set of possible 64-digit solutions. By solving these equations, you are rewarded with cryptocurrencies. The profitability of mining can be determined by a number of factors ranging from computer strength, internet connection, electricity bill, and more.
