Crypto currency is a digital asset, the accounting for which is decentralized. The functioning of these systems takes place using a peer-to-peer distributed computer network. Thus, the information on transactions cannot be ciphered and be accessible in an open kind. To ensure the consistency of the chain of blocks of the transaction database (block chain), cryptography is used.
The term "crypto-currency" was fixed due to the "Crypto Currency" in 2011 about Bitcoin, published in Forbes. The very same author Bitcoin (Satoshi Nakamoto), like many others, used the term "electronic cash" (e-cash). The method of issuing crypto currency can be mining, forging or IPO.
The key feature of the crypto currency is the absence of any internal or external administrator. Therefore, banks, tax, judicial and other public or private bodies can not influence the transactions of any participants in such payment system. All this ensures the irreversibility of transactions, no one can cancel, block, challenge or force a transaction without access to the owner's private key. However, participants in a transaction may voluntarily temporarily block their funds as collateral or establish that the consent of all parties is required to complete or cancel the transaction.
A little about the development of crypto-currency and cryptography
Cryptography for confidential payments has began to be used since 1990 in the DigiCash David Choma centralized payment system, whose company went bankrupt in 1998.
The term "crypto-currency" was first used after the appearance of a payment system Bitcoin, which was developed in 2009 by a person or a group of people under the pseudonym of Satoshi Nakamoto. Forks (branches, followers) appeared later:
- Namecoin, NMC (децентрализованная DNS для регистрации внутри доменной зоны .bit);
- Namecoin, NMC (decentralized DNS for registration inside the zone .bit domain);
- Litecoin (uses "ess crypt" hashing);
- Peercoin, PPC (uses the hybrid PoW / PoS mechanism and does not have an upper limit of the emission volume);
- Novacoin (similar to PPCoin, but uses scrypt);
And many other forks.
In January 2009, someone under the pseudonym of Satoshi Nakamoto presented the first version of the bitcoin-purse to the public and organized the launch of the system. At the same time, an article was published describing the technology itself and the program code. It is still unknown who is behind the pseudonym of Nakamoto. Journalists have repeatedly tried to reveal the identity of the mysterious creator of bitcoin, but so far these attempts are futile.
In February 2011, the bitcoin rate was $ 1, and many decided that it could not cost more. Imagine their surprise, when by May the price increased by 28 times! By August 2011, there were other crypto-currencies. This happened because there appeared more and more proposals for the modernization of the system, not all of which were adopted by the bitcoin community. Those whose ideas were rejected implemented them in their own projects.
In 2013, the crypto-currency world was shocked by two events at once. First, Mt. Gox, which was one of the three largest exchanges for the turnover of bitcoin, said of the problems and later announced bankruptcy, as a result of which traders lost all the funds that were stored on the trading accounts of the exchange.
Since 2014, favorable conditions have been developing for the crypto economy. This is largely due to the appearance of the Ethereum platform. Up to this point, it was thought that only crypto-currencies could be created on the basis of the block chain, but Ethereum was primarily a platform for implementing various projects based on "smart contracts".