Cryptocurrency is defined as amode of transaction that uses a powerful cryptography to verify relocation of assets, guard financial exchange and regulate the creation of other sections. It is like digital currency, alternative currency and virtual currency.

Unlike other banking schemesthat use centralized control, cryptocurrency uses a decentralised mastery.  In 2009, bitcoin emerged the first cryptocurrency and since then more than 4,000 altcoinssuch as the monero wallet have been developed.  Altcoin is simply an alternative coin/ an alternative digital currency other than bitcoin.

Legal Definitions

Cryptocurrency is a scheme that has the following statusaccording to Jan Lansky;

  1. It stores an outline of cryptocurrency units and their takeover
  2. The systems function on one cryptocurrency at a time if two instructions are inserted concurrently.
  3. It doesn’t need a central domination.
  4. It grants transfer of funds and possession of cryptographic units which can be changed.
  5. The system not only determines whether new cryptocurrency units can be formed it also determines the prosperity of their influence.

Cryptocurrencies Transaction Cost

Cryptocurrency charge fee counts on the supply of the network range at the moment versus the demand from currency owner for quick transfer of funds. With the help of the cryptocurrency exchanges, users will be able to know which cost to use to make the process easier. The medianexchange cost for ether tallied to $0.33 in 2017 where else for bitcoin the fee tallied to $23.

Architecture

  1. Mining

It’s theauthorization of transfer of funds where by people who emerge fruitful miners get new cryptocurrency as an incentive. This process became harder over the years where miners now have to invest huge amount of money to be successful.

  1. Anonymity

This simply means that the owners will be unrecognised but the transactions will be seen openly in the blockchain. Features like Zerocoin, ensures privacy of high degree and anonymity. Technologies like ring signatures and zero knowledge proofs which have privacy have cryptocurrencies like Monero and Zcash.

  1. Timestamping

 Every cryptocurrency must have its own system so that credible third parties will not timestamp exchange which are joined to the blockchainaccounts. There are two types of timestamping schemes which are;

  • Proof of stake and combined schemes – this uses a double proof of stake/ proof of work scheme which protects a cryptocurrency network.
  • Proof of work schemes -this scheme was the first one to be created that’s why it is used by many people globally.
  1. Blockchain

This feature helps with the validation of cryptocurrency funds. A blockchain is defined as a continuous list of records known as blocks whereby they are secured and connected using cryptography.

  1. Wallets

A crypto currency wallet xmr keeps addresses, public and private keys used to spend or acceptcryptocurrency. The difference between public and private keys is that with public keys it is credible for other users to send funds to the wallet while with private keys one can write in the public account easily while interacting with the cryptocurrency.

 

About The Author

Doug Hahn