If I had a dime for every time I heard this question I would own a mansion in the hills of Hollywood. It is still one of the most commonly asked questions today.
This currency, as it turns out, is the currency of the future and it’s most likely the one currency that will be the answer to the toughest questions about how our country deals with money.
Would you like to pay fewer fees when transferring money?
Would you like to have more privacy regarding what you do with your money and who you are sending your money to?
Would you like to handle your money with as much freedom as possible?
Therefore, you should ask this question and answer it fully. You should take the time to learn as much as you can about cryptocurrency, what it is, how it works, and what problems it could solve.
Once you finish reading this article in its entirety, you’ll know more about this global phenomenon than 85% of the population.
What is Cryptocurrency? The Most Basic Definition
What is cryptocurrency?
The first answer most folks come up with is Bitcoin, that really isn’t the first answer. The first real answer is digital currency.
This currency was not actually invented solely with the intention of being invented. Cryptocurrency was born out of another invention. Some would say it was a by-product, but whatever you choose to call it, it was not intended to be created.
The unknown inventor, Satoshi Nakamoto, who is still truly unknown as a person, was believed to be making the effort to develop an electronic system that would aid in the management of cash.
This electronic system was intended to manage cash in an electronic fashion only, but it was not entirely perfected.
There was no blueprint if you will, and no real plan before he started.
Others had tried their hand at creating a digital cash system but it had never come to fruition. It was now that Nakamoto believed he could be the one individual to seal the deal on this “cashless” cash system.
A few of the primary goals that were set for this system was to:
- Eliminate double-spending
- Reduce wire transfer fees
- Create a decentralized banking system
These things were much needed and highly desired by the public, but did they make sense? Consider that a bank records and keeps an account of everything on one central server.
With an electronic system, a server isn’t needed.
How are transactions accounted for? A peer-to-peer network is how these transactions are verified. If you have a simple system in which you have accounts, balances, and a list of transactions you have a system that works with cash.
This is how a peer-to-peer network works, making it easier than ever for transactions to be accounted for. The one thing to keep in mind is that all peers that are a part of this network must verify transactions.
When the peers agree, it’s complete. If the peers do not agree on one transaction then it’s a moot point. Have you been able to follow this?
It takes some time to get it down.
Explaining it in different ways will hopefully make it easier for you to understand. Once you learn the most basic concept of this, you’ll be able to answer the question of what is cryptocurrency.