Cryptocurrency is a digital currency. It doesn’t rely on central authority for its transactions, and it uses a decentralized system to manage its transactions and to issue new units. Unlike fiat money which has central authority that controls and issues it. Cryptocurrency uses cryptography for security and safety purposes.
Historically, people used different materials to represent money. Money represents value. I gave you service, and you give me money in exchange. People used materials that they trust its value to represent money. For example, wheat, salt, shells and gold. Then over times things changed, from trusting something to trusting someone, bank or government authority. Paper money was invented, and it was more convenient and practical to use.
Digital money was an easy going from the fiat money using the same central authority to manage it. PayPal, credit cards and wire transfers are all examples of digital money.
Cryptocurrency is digital money as mentioned earlier. When we send files through the internet, usually the sender will have a copy of that file even after sending a copy to the receiver. When it comes to digital money, this problem is called the Double Spend. It’s solved by issuing a ledger by the centralized authority. Actually, there are many attempts to create digital currencies. However, none of them were successful in the Double Spend problem without centralized authority.
In October 2008, Satoshi Nakamoto published a whitepaper suggesting creating a system for a decentralized currency called a Bitcoin. Bitcoin solved the problem of Double Spend by using a transparent ledger without a central authority. A copy of this transparent ledger is available in each computer in the network, what also called blockchain. Blockchain is a cloud that holds the history of each transaction since the beginning of the network.
If you want to hack the ledger, you will have to take down thousands of computers which holds a copy of the ledger and constantly updating it. That makes it too complicated to hack it.
Bitcoin is one of the digital currencies that no bank or government can control. Bitcoin opened the digital commerce to 2.5 million people around the world who don’t have access to the current banking system.
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