Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“
His goal was to invent something; many people failed to create before digital cash.
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. The reason why is a bit technical and complex, but if you get it, you‘ll know more about cryptocurrencies than most people do.
What is a cryptocurrency ?
Cryptocurrency is a digital currency built with cryptographic protocols that make transactions secure and difficult to fake. One characteristic of cryptocurrencies is that they make any transactions easier, the transfer is simplified by the use of public and private keys for security and privacy purposes.
How do you get a cryptocurrency?
You can acquire a cryptocurrency by mining or by simply buying one.
What do you mean by mining? Technically, everybody can be a miner. 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. This way, no ruling party can abuse it , or control the currency flow.
Bitcoins can be created if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a specific amount of cryptocurrency token that can be created in a given amount of time. This is part of the consensus no peer in the network can break.