A cryptocurrency (or cryptocurrency) is a medium of exchange using cryptography to secure the transactions and to control the creation of new units.
Creation
The first cryptocurrency to be created was Bitcoin in 2009. Since then, numerous cryptocurrencies have been created. Cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is prior defined and publicly known.
In centralized banking and economic systems such as the Federal Reserve System, governments control the value of the currency by printing units of fiat money or demanding additions to digital banking ledgers. However, governments cannot produce units of cryptocurrency and as such, governments cannot provide backing for firms, banks or corporate entities which hold asset value measured in a decentralized cryptocurrency. The underlying technical system upon which all cryptocurrencies are now based was created by the group or individual known as Satoshi Nakamoto. Hundreds of cryptocurrency specifications now exist; most are similar to and derived from the first fully implemented cryptocurrency, Bitcoin. Similar protocols include Proof-of-stake, a common authentication protocol forked from the Proof-of-work authentication protocol used by Bitcoin.
Within cryptocurrency systems, the safety, integrity, and balance of all ledgers are maintained by a community of mutually distrustful parties referred to as miners: members of the general public who allow their idle computers to help validate and process transactions. The underlying security of cryptocurrency systems comes from the difficulty of finding hash set intersections a task which generally takes a computer O(2^n/2) number of iterations to complete where n is the hash functions output size in bits. Bitcoins hashing function, SHA-2 has an output size of 512 bits, therefore a collision would take O(2^256) iterations to find -- a little less than one-thousandth the number of atoms in the observable universe (~2^266).
A type of cryptocurrency security subversion far more likely to succeed is the so-called 51% attack; in this scenario an extremely powerful attacker attempts to take control of the global block-chain ledger by generating an alternate block-chain faster than the honest one being produced by all other miners, this attack is very expensive and ineffective as payee wallet-nodes are not going to accept references to invalid transactions as payment, and honest Mining nodes will never accept a block containing them. An attacker using the 51% technique can only hope to undo one of his own transactions. Most cryptocurrencies are designed to gradually decrease the production of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This can mimic the scarcity (and value) of precious metals and avoid hyperinflation.
Creation
The first cryptocurrency to be created was Bitcoin in 2009. Since then, numerous cryptocurrencies have been created. Cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is prior defined and publicly known.
In centralized banking and economic systems such as the Federal Reserve System, governments control the value of the currency by printing units of fiat money or demanding additions to digital banking ledgers. However, governments cannot produce units of cryptocurrency and as such, governments cannot provide backing for firms, banks or corporate entities which hold asset value measured in a decentralized cryptocurrency. The underlying technical system upon which all cryptocurrencies are now based was created by the group or individual known as Satoshi Nakamoto. Hundreds of cryptocurrency specifications now exist; most are similar to and derived from the first fully implemented cryptocurrency, Bitcoin. Similar protocols include Proof-of-stake, a common authentication protocol forked from the Proof-of-work authentication protocol used by Bitcoin.
Within cryptocurrency systems, the safety, integrity, and balance of all ledgers are maintained by a community of mutually distrustful parties referred to as miners: members of the general public who allow their idle computers to help validate and process transactions. The underlying security of cryptocurrency systems comes from the difficulty of finding hash set intersections a task which generally takes a computer O(2^n/2) number of iterations to complete where n is the hash functions output size in bits. Bitcoins hashing function, SHA-2 has an output size of 512 bits, therefore a collision would take O(2^256) iterations to find -- a little less than one-thousandth the number of atoms in the observable universe (~2^266).
A type of cryptocurrency security subversion far more likely to succeed is the so-called 51% attack; in this scenario an extremely powerful attacker attempts to take control of the global block-chain ledger by generating an alternate block-chain faster than the honest one being produced by all other miners, this attack is very expensive and ineffective as payee wallet-nodes are not going to accept references to invalid transactions as payment, and honest Mining nodes will never accept a block containing them. An attacker using the 51% technique can only hope to undo one of his own transactions. Most cryptocurrencies are designed to gradually decrease the production of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This can mimic the scarcity (and value) of precious metals and avoid hyperinflation.
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