Cryptocurrency simplified – Understand digital currency such as Bitcoin, Etherum, Litecoin, or Cardano in the most possible uncomplicated manner.

What is a cryptocurrency or digital currency?

Cryptocurrency is a currency that mints digitally with cryptography techniques. This digital currency is mint and exchange virtually in a virtual unit instead of in the form of paper or metal coins such as government-controlled fiat currency. It is a system of computer networks hence its reliance on computers only. These networks are in a decentralized structure and don’t have central servers. As cryptocurrency is in digital form, it can use an online-only, direct from one person to another, like peer to peer. Such digital currency doesn’t govern by any institute or legal body, so there is no rule for owning, buying or selling it. As there is no governing body, cryptocurrencies are global.
Each transaction of cryptocurrency is storing in all decentralized network computers with blockchain technology. It means one can see the transaction records, but couldn’t identify from whom it went which person, as digital currencies don’t carry owner’s identities. Yes, it is pseudonymous, and therefore the ownership of cryptocurrency is claimed by its private and public key assigned to the unit.

Sounds very exciting, right? At least for me, as the subject of cryptography excites me a lot. It seems like dive into the fiction world of Dan Brown.

Origin of the cryptocurrency concept and how does it work?

In 1983 when the internet starts coming into the mainstream, an innovative cryptographer David Chaum thought of electronic money that should be cryptographic & anonymous. He aimed to create a payment system that doesn’t route thru a third party like the reserve bank or any other financial institute which impose its rules & regulators. He believes users should have control over their money and information. This thought resulted in the development of the first system called “ecash”, it evolves over time & in the year 1995, he implemented it thru DigiCash in one US bank to use as a micropayment system. Though it works for a short time of two years, it was the origin of cryptocurrency. By the time this technology and concept keeps evolving and experimenting more.
In the year 2009, the first fully decentralized cash system has created that is called Bitcoin.
Who is the creator of Bitcoin? The answer is Satoshi Nakamoto. But the exciting part is, no one knows who is Satoshi Nakamoto? Is the person or a group of people? Like the concept of cryptocurrency, the creator of Bitcoin is anonymous.

-Things are getting more interesting.

In 2008 Satoshi Nakamoto wrote a whitepaper on Bitcoin, which outlines all details of the system and understanding of how it works. In the coming times, it becomes the fundamental structure of all current cryptocurrencies. All other digital currencies have their unique features, but at the core, it fundamentally works the same as described in the bitcoin whitepaper. It is not wrong to say the bitcoin whitepaper by Satoshi Nakamoto is the bible of all cryptocurrencies. If you could learn & understand this whitepaper thoroughly, you will be a master of cryptocurrency.

The simplest possible explanation of how the system works is something like this.

1. Cryptocurrency users have a wallet. This wallet is software that is installed on a computer or any mobile computing device. This wallet has a public key and a private key. The public key is like your address & the private key is like a password that should be known to you only.
2. With this, person A generates a transaction, thru a wallet, communicates establish to the blockchain network of cryptocurrency. with the detail of person A(public Key), amount and person B(public key). Remember there is no actual identity attached with person A or B. They only identify by their Public Key.
3. The transaction block is generated with the digital signature(Private Key) from person A. It can be verified publically. This transaction block is composed of information on debit, credit, transaction fees, timestamps & Public Key information of both the party. 
4. Once a transaction block is generated, it is sent to every node of the blockchain network. 
5. The nodes on the blockchain network are miners. They all compete with each other to validate and process the received block. Every Miner node process to find proof-of-work or proof-of-stake (depending on which technology use in particular currency). Proof-of-work or proof-of-stake is a mathematical puzzle-solving technique. 
6. When a miner node first solves this puzzle, or say first finds a Proof-of-work / proof-of-stake, it broadcast it to all other nodes. Here, the first finder of proof-of-work is rewarded with new cryptocurrency units. That is how cryptocurrency mint and its ownership are assigned.
7. All nodes verify all the transaction details and check not already spent. All nodes accept the block by creating the next block in the chain by the hash of the accepted block as the previous hash.
8. Ownership of blocks that have the transaction details transferred to Person B’s Public Key. 
9. The transaction is recorded in the blockchain for a lifetime. Person B receives transactions in their wallet.

Cryptocurrency is a complex subject to understand, although we have tried to give basic understanding in the most possible simple manner.
Following, we have jotted down points, that we believe helps you to understand digital currency and its related technology at a glance.

• Cryptocurrency is a decentralized digital cash system.
• Cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.
• Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority.
• Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC).
• When a cryptocurrency is minted or created before issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
• The first conceptual attempt for digital currency was made in 1983 by the American cryptographer David Chaum.
• In the year 2009, the first fully decentralized digital cash system was created.
• The first cryptocurrency is called BitCoin. Its creator is known as Satoshi Nakamoto.
• No one knows who Satoshi Nakamoto is. He, She or the group interacted only via email and forum.
• In Late 2008 Satoshi Nakamoto has published a white paper on Bitcoin. Which outline What is BitCoin and how it works.
• On January 12, 2009, Satoshi Nakamoto made the first Bitcoin transaction.
• In 2011, Satoshi Nakamoto was gone.
• A white paper by Satoshi Nakamoto on Bitcoin eventually becomes the fundamental structure of cryptocurrency architecture. 
• Tokens, cryptocurrencies, and other types of digital assets that are not bitcoin are collectively known as alternative cryptocurrencies.
• Crypto token – A blockchain account can provide functions other than making payments, for example, in decentralized applications or smart contracts. (Units of) fungible tokens are sometimes referred to as crypto tokens. These terms are usually reserved for other fungible tokens than the main cryptocurrency of the blockchain, that is, usually, for fungible tokens issued within a smart contract running on top of a blockchain such as Ethereum. There are also non-fungible tokens.
• non-fungible tokens – The rise in the popularity of cryptocurrencies in early 2021 has also lead to the rise in the popularity of non-fungible tokens, commonly referred to as NFTs. An NFT is data that is stored in a digital ledger, and this data represents a specific something. For example, an NFT can represent an artwork, a music album or some other type of digital file. There is a common misconception that NFTs are an actual type of cryptocurrency, but they are not. The main similarity between cryptocurrency and NFTs is that they both have a stored digital record on a blockchain. With NFTs, each token purchased has a value that is unique and cannot possibly be exchanged for another token of equal value.
• A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data.
• In the world of Cryptocurrency, a node is a computer that connects to a cryptocurrency network. The node supports the relevant cryptocurrency’s network through either; relaying transactions, validation or hosting a copy of the blockchain.
• The first timestamping scheme invented was the proof-of-work scheme. The most widely used proof-of-work schemes are based on SHA-256 and Scrypt. Some other hashing algorithms that are used for proof-of-work include CryptoNight, Blake, SHA-3, and X11.
• The proof-of-stake is a method of securing a cryptocurrency network and achieving distributed consensus through requesting users to show ownership of a certain amount of currency.
• In cryptocurrency networks, mining is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network.
• Some miners pool resources, sharing their processing power over a network to split the reward equally, according to the amount of work they contributed to the probability of finding a block. A “share” is awarded to members of the mining pool who present valid partial proof of work.
• The total supply is limited to 21 million for bitcoins.
• A cryptocurrency wallet stores the public and private “keys” (address) or seed which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency. With the public key, others can send currency to the wallet.
• Bitcoin is pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or “addresses”). Thereby, bitcoin owners are not identifiable, but all transactions are publicly available in the blockchain.
• The rewards paid to miners increase the supply of the cryptocurrency. By making sure that verifying transactions is a costly business, the integrity of the network can be preserved as long as benevolent nodes control a majority of computing power.
• The verification algorithm requires a lot of processing power, and thus electricity to make verification costly enough to accurately validate public blockchain. Not only do miners have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem, they further must consider the significant amount of electrical power in search of the solution. Generally, the block rewards outweigh electricity and equipment costs, but this may not always be the case.
• Transaction fees for cryptocurrency depend mainly on the supply of network capacity at the time, versus the demand from the currency holder for a faster transaction.
• Cryptocurrency exchanges allow customers to trade cryptocurrencies for other assets, such as conventional fiat money, or to trade between different digital currencies.
• Atomic swaps are a mechanism where one cryptocurrency can be exchanged directly for another cryptocurrency, without the need for a trusted third party such as an exchange.
• The “market cap” of any coin is calculated by multiplying the price by the number of coins in circulation. The total cryptocurrency market cap has historically been dominated by Bitcoin accounting for at least 50% of the market cap value where altcoins have increased and decreased in market cap value with Bitcoin.
• The rise in the popularity of cryptocurrencies and their adoption by financial institutions has led some governments to assess whether regulation is needed to protect users.
• As the popularity of and demand for online currencies has increased since the inception of bitcoin in 2009, so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society. Concerns abound that altcoins may become tools for anonymous web criminals.
• Cryptocurrency networks display a lack of regulation that has been criticized as enabling criminals who seek to evade taxes and launder money. Money laundering issues are also present in regular bank transfers, however, with bank-to-bank wire transfers, for instance, the account holder must at least provide a proven identity.
• Mining for proof-of-work cryptocurrencies consumes significant quantities of electricity and has a large associated carbon footprint.[146] In 2017, bitcoin mining was estimated to consume 948MW, equivalent to countries on the scale of Angola or Panama, respectively ranked 102nd and 103rd in the world. Proof-of-work blockchains such as Bitcoin, Ethereum, Litecoin, and Monero were estimated to have added 3 to 15 million tonnes of carbon dioxide emissions to the atmosphere in the period from 1 January 2016 to 30 June 2017. By November 2018, Bitcoin was estimated to have an annual energy consumption of 45.8TWh, generating 22.0 to 22.9 million tonnes of carbon dioxide, rivalling nations like Jordan and Sri Lanka.
• Critics have also identified a large electronic waste problem in disposing of mining rigs
• Bitcoin is the least energy-efficient cryptocurrency, using 707.6 kilowatt-hours of electricity per transaction. In comparison, the world’s second-largest cryptocurrency, Ethereum, uses 62.56 kilowatt-hours of electricity per transaction.
• There are also purely technical elements to consider. For example, technological advancement in cryptocurrencies such as bitcoin results in high up-front costs to miners in the form of specialized hardware and software. Cryptocurrency transactions are normally irreversible after several blocks confirm the transaction. Additionally, cryptocurrency private keys can be permanently lost from local storage due to malware, data loss or the destruction of the physical media. This precludes the cryptocurrency from being spent, resulting in its effective removal from the markets.
• Several aid agencies have started accepting donations in cryptocurrencies, including the American Red Cross, UNICEF, and the UN World Food Program. Cryptocurrencies make tracking donations easier and have the potential to allow donors to see how their money is used (financial transparency).
• In 2010, a programmer bought two pizzas for 10,000 BTC in one of the first real-world bitcoin transactions. Today, 10,000 BTC is equal to roughly $38.1 million.
• Ethereum has quickly skyrocketed in value since its introduction in 2015, and it is now the 2nd most valuable cryptocurrency by market cap.

List of most known Digital Currency.

List of some of the best Crypto Exchanges

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