What are Cryptocurrencies?
Cryptocurrencies are highly secure virtual digital assets. You can use them as a medium of exchange and some are a good store of value. They are entries in a database that is not controlled by anyone. That database is called the blockchain.
Satoshi created bitcoin, the first cryptocurrency, which solved the problem of digital currencies being spend twice.
Cryptocurrencies can work as:
1. A medium of exchange (like money)
2. A store of value (like gold).
The demand and supply of cryptocurrencies are what gives them their value.
Whenever cryptocurrencies are sent from one digital wallet to another, the wallet uses a encrypted signature to provide mathematical proof that the person sending the cryptocurrency had the authorisation to do so.
Only the person with the private key can send the cryptocurrencies. The transaction is then confirmed by miners and added on the blockchain.
Some key features of cryptocurrencies:
- Transactions cannot be reversed once confirmed.
- Only private key owner can send cryptocurrencies.
- Transactions take place in minutes.
- No identity is linked to account or transaction.
We will cover mining and the transaction process in more detail later in the course.
In the next lesson we will focus on learning more about bitcoin, the first cryptocurrency.