Cryptocurrency - coins, tokens, currencyPublished Wednesday, 10th February 2021
Coins, tokens, currency - these are just some of the names used to describe cryptocurrencies. But these also require an understanding of how money works to make sense of these terms.
Approaching bitcoin from an economic perspective, you can think of cryptocurrency as another type of money that can be exchanged for goods and services. Cryptocurrencies aren’t controlled by central authorities; their regulation occurs at the network level, by a set of rules known as a protocol.
A blockchain is a public ledger that records all transactions that have ever been executed. Each entry in the blockchain is known as a block and contains a time stamp and a link to a previous block.
The first digital cryptocurrency was bitcoin, which was created in 2009 by an unidentified programmer or group of programmers. Bitcoin uses blockchain technology to verify the transfer of funds. Since its creation, additional cryptocurrencies have been created, including ethereum, ripple, litecoin and ether classic. Many others are in development.
It is the first decentralised digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.