A cryptocurrency, cryptosystem, or cryptocoin is a digital currency designed to function as a medium of interbank electronic trading where user identity information is stored in a public database in a block-chain format, usually on servers that are not accessible by the public. A typical “block chain” is a series of communications that link one or more pre-determined communication channels such as a telephone network or a network of Internet service providers. Cryptocurrency has emerged from years of research into various forms of decentralized ledgers and distributed databases used by paid crypto signals government agencies such as the Internal Revenue Service, the Securities and Exchange Commission, and the National Security Agency to track financial activities of businesses and individuals. Cryptocurrency has the potential to bring about considerable cost savings and operational efficiencies, as well as improving accuracy and trust in monetary systems.
The term “crypto-currency” derives from two main sources. The first is the original cryptosystem, which was designed around 1980 by cryptographers who recognized the potential value in using a public network to facilitate secure, instant transactions without the use of private key infrastructure. The second source of the term is a newer field of study known as distributed ledger technology, which applies the ideas and concepts of the cryptosystem to the trade environment. Distributed ledger technology is increasingly applied to the trade environment, although it is much less popularly used for internal trade chains. Distributed ledger technology is also related to the name “blockchain”, an overall term referring to the entire process of using the ledger as described by its users. This broader term may be used to refer to any combination of ledger systems.
One of the most fundamental properties of the distributed ledger is that it is fruitless, since no individual or organization controls the system. A major advantage of using a Cryptocurrency is that it allows for real-time global trading, with instant confirmation of deposits and cash transfers. Since no entity holds or controls the Cryptocurrency, there is no need to worry about security breaches like there would be if you were using a traditional bank-based ATM machine. Another advantage of using a Cryptocurrency is that it can be “poured” into, or minted from, another digital currency.
In order for Cryptocurrency to be considered usable and functional by all consumers or merchants in the economy, certain characteristics must be present. First, the system must be able to process transfers of all currencies. Secondly, each Cryptocurrency must have a unique private key that authenticates the transactions it makes. Finally, each user should be able to view and update their information at any time. This ability to view information at anytime is known as “proof of burn” in the Cryptocurrency world.
There are several different types of Cryptocurrencies. Two of the most popular include the Classical Cryptocurrency and the Virtual Currency. With the former, the value of one Cryptocurrency is tied directly to the worth of the Fiat Currency of which it is linked to. Virtual Cryptocurrency on the other hand, is a type of Cryptocurrency that functions exactly like an “asset” that has a value independent of any nation or country. It is usually referred to as a digital asset and is created through a “ICO” (ecosystem integration). One of the biggest advantages of Virtual Cryptocurrency is that it can be traded back by any fiat currency and is not limited by any physical commodity.
A good example of a Cryptocurrency is the Euro. All of the major currencies in the world, including the US dollar, Swiss franc, Japanese yen, Canadian dollar, and the Australian dollar actually have significant worth as Cryptocurrency. If a specific Euro has increased in value versus another Euro, then the Euro with the more valuable Fiat Currency is purchased. In the same way, a Virtual Currency acquired through an incentive program in which the developer is rewarded with commissions when their Cryptocurrency units are retrieved or spent, will increase in value the moment that unit is purchased or sold by their private investor group or government.