Cryptocurrencies such as Bitcoin,ethereum and many others

    Cryptocurrencies: Dawn of a new economy

The Money of 21st century

 What is cryptocurrencies ? Should i invest in it?

This article will help you answer the most important thing about cryptocurrencies. After you‘ve read it, you‘ll know more about it than most other humans.  

So let‘s walk through the whole story. What are cryptocurrencies?

1.IDEA behind cryptocurrencies? 
2.Who are miners?
3.How do miners earn bitcoins?

In 2008 Satoshi Nakamoto said he developed “A Peer-to-Peer Electronic Cash System.“

Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority.  – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.

His main aim was to create a system of payments which was completely decentralised .In the mid-nineties, there were  many attempts to create digital money, but they all failed.

After seeing all the attempts fail, Satoshi tried to build a digital cash network without a central entity. Like a Peer-to-Peer network for file sharing.This concept gave birth to Cryptocurrencies

Now to realize this system a bit more you need a payment network (imagine)with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the  double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a central authority who keeps record about the balances and all transactions.

In a decentralized network, you don‘t have this server. So you need every single entity of the network to do this job. Every entity in the network needs to have a list with all transactions to check if future transactions are valid or to prevent an  attempt to double spend.
But how can these entities keep a record about every transaction this will consume large chunks of memory of their system.
If the entities of the network disagree about only one single, minor balance, everything in network is  broken. They need an absolute consensus. Usually, you take again, a central authority to declare the correct state of balance. But how can you achieve consensus without a central authority or in our words our Bank?
Nobody did know until Satoshi emerged out of with his idea. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority or any bank. Cryptocurrencies are a part of this solution – the part that made the solution thrilling, fascinating and helped it to roll over the world.

What are cryptocurrencies really? 

Cryptocurrecies are nothing more than data filled in some backend database that cannot be forged or changed until some condition is followed

.This is what our actual physical money is take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition stated by that central authority than you physically own the coins and notes? Money is all about a verified entries in some kind of database of accounts, balances, and transactions. 

who are miners? HOW do they earn?

To answer this question imagine a network of  bitcoins (peer to peer network) say John wants to send some X amount to kelly via bitcoin network so when he will try to send some X bitcoins to kelly his data will in encrypted form and as a thumb rule of  peer to peer network every member of that network will have history about transfer in their list .But this payment will  be confirmed after some period of time 

Confirmation is a critical concept in cryptocurrency. You can also  say that cryptocurrencies are all about confirmation.
As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed . It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.
Only miners can confirm transactions. This is their job in a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to it's database because now it has became part of the blockchain.
For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins.

What are miners doing?

Principally anybody can be a miner. Since a decentralized network has no authority for this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peers and spreads forged transactions. The system would break immediately.
So, Satoshi set the rule that the miners need to invest some work of their computers to qualify for this task. In fact, they have to find a hash – a product of a cryptographic function – that connects the new block with its predecessor. This is called the Proof-of-Work. In Bitcoin, it is based on the SHA 256 Hash algorithm. don't worry about this SHA algorithm THE FAcT is THIS IS THE WAY MINERS EARN MONEY .

BUT JUST A MINUTE  WE SAID BITCOIN  TRANSACTION NEED MINERS TO USE THEIR COMPUTERS TO SOLVE  COMPLEX  CRYPTOLOGIC PUZZLES 

but now as these problems are really .. tough (not 2+2=4) they require

great computational powers

and as every miner in network cannot afford HIGH END computers to solve this puzzle so here COMES the RELATIVELY NEW HACKING term comes to picture called :- Cryptojacking a new problem for cyber security firms these days.

Transactional properties:

1.) Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. Not you, not your bank, not the president of the United States, not Satoshi, not your miner.
2.) Pseudonymous: Neither transactions nor accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of users with those addresses.
3.) Fast and global: Transaction are propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely in different of your physical location.
4.) Secure: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers makes it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.
5.) Permissionless: You don‘t have to ask anybody to use cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you. There is no gatekeeper.

 

 Finally Summing things Up 

LAST Question ? How many  genuine types of cryptos are available these  days to make some buisness going

For buisness related tasks check this CRYPTOS

    

 checkout my next article about Cryptojacking.

IF you guys have any query about this  post a comment below i will try to answer them all.