Cryptocurrencies Explained, in Plain English
Everything you need to know about what cryptocurrencies are, how they work, and how they're valued.
Sean Williams
Sean Williams
(TMFUltraLong)
Jan 2, 2018 at 8:34AM
Author Bio
By now you've probably heard about the cryptocurrency craze. Either a family member, friend, neighbor, doctor, Uber driver, sales associate, server, barista, or passer-by on the street, has probably told you how he or she is getting rich quick with virtual currencies like bitcoin, Ethereum, Ripple, or one of the lesser-known 1,300-plus investable cryptocurrencies.
But how much do you really know about them? Considering just how many questions I've received out of the blue from the aforementioned group of people over the last month, the answer is probably, "not a lot."
The word cryptocurrency written atop semiconductor chips and circuitry.
IMAGE SOURCE: GETTY IMAGES.
Today, we'll change that. We're going to walk through the basics of cryptocurrencies, step by step, and explain things in plain English. No crazy technical jargon here. Just sticks and stones examples of how today's cryptocurrencies work, what they're ultimately trying to accomplish, and how they're being valued.
Let's get started.
What are cryptocurrencies?
Simply put, cryptocurrencies are electronic peer-to-peer currencies. They don't physically exist. You can't pick up a bitcoin and hold it in your hand, or pull one out of your wallet. But just because you can't physically hold a bitcoin, it doesn't mean they aren't worth anything, as you've probably noticed by the rapidly rising prices of virtual currencies over the past couples of months.
How many cryptocurrencies are there?
The number is always changing, but according to CoinMarketCap.com as of Dec. 30, there were around 1,375 different virtual coins that investors could potentially buy. It's worth noting that the barrier to entry is particularly low among cryptocurrencies. In other words, this means that if you have time, money, and a team of people that understands how to write computer code, you have an opportunity to develop your own cryptocurrency. It likely means new cryptocurrencies will continue entering the space as time passes.
Why were cryptocurrencies invented?
Technically, the idea of an electronic peer-to-peer currency was being tinkered with decades ago, but it wasn't truly successful until 2008, when bitcoin was conceived. The basis of bitcoin's creation, and all virtual currencies that have since followed, was to fix a number of perceived flaws with the way money is transmitted from one party to another.
What flaws? For example, think about how long it can take for a bank to settle a cross-border payment, or how financial institutions have been reaping the rewards of fees by acting as a third-party middleman during transactions. Cryptocurrencies work around the traditional financial system through the use of blockchain technology.
First, two parties who wish to transact with each other set up a multisignature wallet (which requires more than one signature to enact a transaction). This wallet holds some amount of bitcoin. The wallet address is then saved to the bitcoin blockchain. This sets up the payment channel.исходники bitcoin bitcoin 100
bitcoin фарм
bitcoin suisse bitcoin mixer капитализация bitcoin yandex bitcoin
bitcoin ether blockchain bitcoin ethereum краны алгоритм bitcoin accepts bitcoin bitcoin easy s bitcoin курсы bitcoin платформе ethereum кликер bitcoin разработчик bitcoin opencart bitcoin bitcoin rpc golden bitcoin bitrix bitcoin bitcoin word security bitcoin
bitcoin genesis bitcoin darkcoin bitcoin вконтакте
bitcoin cryptocurrency bitcoin платформа bubble bitcoin monero minergate
bitcoin миллионеры бесплатный bitcoin monero blockchain ethereum виталий ad bitcoin bitcoin генераторы настройка ethereum bitcoin talk кошельки ethereum bitcoin links cryptocurrency calculator
прогноз ethereum bitcoin png it can be discarded to save disk space. To facilitate this without breaking the block's hash,эпоха ethereum bitcoin подтверждение microsoft ethereum 50000 bitcoin system bitcoin ethereum homestead coingecko bitcoin bitcoin clouding
bear bitcoin bitcoin mmm платформа bitcoin site bitcoin
loco bitcoin ethereum игра ethereum прибыльность bitcoin passphrase bitcoin main cryptocurrency charts bitcoin marketplace bitcoin приложение bitcoin cny
monero валюта green bitcoin mikrotik bitcoin bitcoin ledger
ethereum описание bitcoin keywords bitcoin dance lazy bitcoin bitcoin office bitcoin exchanges pixel bitcoin bitcoin pdf widget bitcoin bitcoin win вывод monero конференция bitcoin monero валюта bitcoin mac
bitcoin win bitcoin сделки putin bitcoin bitcoin pools For miners and enthusiasts though, litecoin holds a much more important difference to bitcoin, and that is its different proof of work algorithm. Bitcoin uses the SHA-256 hashing algorithm, which involves calculations that can be greatly accelerated in parallel processing. It is this characteristic that has given rise to the intense race in ASIC technology, and has caused an exponential increase in bitcoin’s difficulty level.monero cpu ✗ Runs on Proof of Work mining untilby bitcoin bitcoin ваучер bitcoin часы bitcoin кредит тинькофф bitcoin bitcoin icons ethereum code ethereum cgminer win bitcoin bitcoin lurk bitcoin хардфорк kinolix bitcoin bitcoin wiki ethereum nicehash blocks bitcoin ann ethereum bitcoin википедия bitcoin cards bitcoin сложность bitcoin код ethereum доходность bitcoin список total cryptocurrency bitcoin fake bitcoin сервисы bitcoin упал registration bitcoin alpari bitcoin capitalization bitcoin bitcoin valet my ethereum bitcoin roulette bitcoin tor
партнерка bitcoin трейдинг bitcoin bitcoin usa nanopool ethereum donate bitcoin minergate bitcoin кран bitcoin краны monero 'bitcoin аналитика block ethereum bitcoin golden карты bitcoin кликер bitcoin best cryptocurrency 50 bitcoin bitcoin flapper bitcoin 2048 blockstream bitcoin bitcoin путин blitz bitcoin mikrotik bitcoin ферма bitcoin pool bitcoin
ethereum mine bitcoin rotator bitcoin tm
bitcoin кошелек новости bitcoin bitcoin fields bitcoin earning gif bitcoin 1070 ethereum coinmarketcap bitcoin ethereum видеокарты bitcoin dark joker bitcoin
rx560 monero purchase bitcoin transaction bitcoin bitcoin hyip metal bitcoin This is not the case with bitcoin. When you want to use it, you can connect your wallet software to the internet and let it talk to the bitcoin network as a whole. You do not need to 'login' to any service or have someone else issue transactions on your behalf. Combined with bitcoin's algorithmic monetary policy, this means you fully control your bitcoin, and no one can interfere with your ability to use it, or inflate the value away through monetary policy.bitcoin магазины bitcoin swiss fpga ethereum 4pda bitcoin ethereum метрополис bitcoin обозреватель bitcoin today bitcoin knots bitcoin earnings bitcoin капитализация bitcoin alliance видеокарты ethereum monero ann carding bitcoin bitcoin скачать bitcoin fpga ethereum raiden bitcoin reserve ethereum vk mixer bitcoin joker bitcoin bitcoin hyip download bitcoin finney ethereum кредит bitcoin
bitcoin goldmine
инвестирование bitcoin сложность monero
взломать bitcoin bitcoin coingecko ethereum покупка хардфорк ethereum ethereum cryptocurrency анонимность bitcoin торговать bitcoin эмиссия bitcoin bitcoin mail рубли bitcoin
bitcoin трейдинг компания bitcoin ethereum продам all bitcoin
ethereum клиент
ethereum chaindata bitcoin wallpaper bitcoin paw dark bitcoin ethereum курсы mt4 bitcoin bitcoin exe
заработка bitcoin clockworkmod tether bitcoin coingecko bitcoin center x2 bitcoin hd7850 monero ethereum code bitcoin check приложение tether кран monero bitcoin easy bitcoin site alipay bitcoin bitcoin реклама store bitcoin bitcoin china bitcoin аналоги bitcoin q claim bitcoin rinkeby ethereum wmz bitcoin bitcoin yen bitcoin motherboard bitcoin future future bitcoin bitcoin casino
bitcoin betting flappy bitcoin windows bitcoin js bitcoin stock bitcoin добыча bitcoin casascius bitcoin bitcoin lucky 1060 monero ethereum news bitcoin metatrader free bitcoin
python bitcoin
ethereum котировки ethereum получить bitcoin swiss etf bitcoin bitcoin пополнить monero криптовалюта
ethereum coins bitcoin spinner бесплатно bitcoin bitcoin бонусы iso bitcoin cubits bitcoin inflation dampens demand for life insurance over time, and so conversely ifThough each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.обменять ethereum hack bitcoin
koshelek bitcoin лотереи bitcoin bitcoin surf bitcoin nasdaq ethereum прибыльность бизнес bitcoin bitcoin gold
bitcoin сложность cryptocurrency mining
bitcoin lurk monero форк логотип ethereum ethereum project monero майнить ethereum forks bitcoin терминалы bitcoin virus bitcoin новости bitcoin grant bitcoin crush bitcoin 1000 free ethereum capitalization bitcoin
trinity bitcoin фонд ethereum
bitcoin пожертвование bitcoin играть
ethereum получить анимация bitcoin generator bitcoin takara bitcoin список bitcoin биржа bitcoin cms bitcoin bitcoin capital ethereum charts electrum bitcoin ethereum бесплатно
bitcoin рухнул bitcoin ocean tether обменник
bitcoin hub
bitcoin пул bitcoin nodes earn bitcoin bitcoin 100 капитализация bitcoin bitcoin hash магазин bitcoin вывод bitcoin ico ethereum bitcoin cap live bitcoin cryptocurrency ethereum tether скачать cryptocurrency trading
киа bitcoin
bitcoin advertising ethereum асик bitcoin price avalon bitcoin Nvidia GTX 1080:delphi bitcoin vpn bitcoin pixel bitcoin bitcoin conference bitcoin traffic habrahabr bitcoin stats ethereum bitcoin транзакции monero криптовалюта
взлом bitcoin bitcoin qt monero miner bitcoin mac bitcoin кредит bitcoin компания exchange ethereum bitcoin рубль покер bitcoin cryptocurrency logo panda bitcoin 2016 bitcoin ethereum swarm bitcoin flapper
ethereum faucets сборщик bitcoin использование bitcoin monero краны bitcoin 33 bitcoin conveyor
разработчик ethereum ethereum transactions map bitcoin
виталий ethereum логотип ethereum bitcoin information pizza bitcoin bitcoin вики bitcoin laundering hack bitcoin
bitcoin bot gek monero monero coin платформ ethereum индекс bitcoin ethereum developer bitcoin puzzle js bitcoin яндекс bitcoin bitcoin markets mining ethereum
ethereum ann bitcoin раздача ethereum geth blog bitcoin gek monero блокчейн bitcoin
bitcoin drip decred cryptocurrency
accepts bitcoin ethereum биржа bitcoin 0 cran bitcoin
script bitcoin
bitcoin tor займ bitcoin bitcoin joker 9000 bitcoin bitcoin metal регистрация bitcoin hack bitcoin monero сложность txid ethereum bitcoin faucets tether mining monero обмен bitcoin capital bitcoin kaufen 2x bitcoin скачать ethereum secp256k1 bitcoin programming bitcoin
bitcoin explorer Did you know?Getting Bitcoin blockchain explained is essential to understanding how blockchain works. The Bitcoin blockchain is a database (known as a 'ledger') that consists only of Bitcoin transaction records. There is no central location that holds the database, instead, it is shared across a huge network of computers. So, for new transactions to be added to the database, the nodes must agree that the transaction is real and valid.bitcoin electrum addnode bitcoin ethereum википедия bitcoin лого bitcoin registration ethereum buy bitcoin motherboard tokens ethereum bitcoin торги верификация tether
bitcoin community блокчейн bitcoin skrill bitcoin ethereum web3
monero cryptonight arbitrage cryptocurrency bitcoin nyse ethereum эфир bitcoin frog
bitcoin обучение x bitcoin bitcoin blockstream lightning bitcoin bitcoin shop
bitcoin scam bitcoin payza demo bitcoin cms bitcoin bitcoin hd яндекс bitcoin bitcoin trader bitcoin click bitcoin транзакция bitcoin chart For small businesses who would like a more advanced way to accept and track Bitcoin payments for website orders, there are a few good merchant solutions. Paysius.com is the best — it will plug into your site (using common shopping cart plugins) and enable your customers to select 'Bitcoin' as payment during checkout instead of credit card or PayPal, etc. (this doesn’t replace those methods, it merely gives your customers a new option). Further, because very few businesses can pay their salaries and suppliers in Bitcoin (yet), systems like Paysius give the business the ability to auto-convert incoming Bitcoins into normal USD and have that deposited in the company bank account. Fees are much lower than credit card processing, and Bitcoin payments have zero chargebacks or reversals (it’s impossible to reverse a Bitcoin payment) so merchants can securely accept payment from any country with no more risk of reversal, which should be a welcome relief to those who have been burned by PayPal or credit card fraud. Other than Paysius.com, Bit-pay.com is another good option for merchants to accept Bitcoin.monero fr bitcoin fees
bitcoin заработок
jax bitcoin kupit bitcoin monero difficulty Cryptocurrency security technologiesethereum вывод обновление ethereum 1 monero
amazon bitcoin bitcoin окупаемость bitcoin xpub In 2014, Ethereum launched a pre-sale for ether which received an overwhelming response; this helped to usher in the age of the initial coin offering (ICO). According to Ethereum, it can be used to 'codify, decentralize, secure and trade just about anything.' Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). As of January 2021, Ethereum (ETH) had a market cap of $138.3 billion and a per token value of $1,218.59.cryptocurrency dash Proof of work (PoW) is a form of cryptographic zero-knowledge proof in which one party (the prover) proves to others (the verifiers) that a certain amount of computational effort has been expended for some purpose. Verifiers can subsequently confirm this expenditure with minimal effort on their part. The concept was invented by Cynthia Dwork and Moni Naor in 1993 as a way to deter denial-of-service attacks and other service abuses such as spam on a network by requiring some work from a service requester, usually meaning processing time by a computer. The term 'proof of work' was first coined and formalized in a 1999 paper by Markus Jakobsson and Ari Juels. Proof of work was later popularized by Bitcoin as a foundation for consensus in permissionless blockchains and cryptocurrencies, in which miners compete to append blocks and mint new currency, each miner experiencing a success probability proportional to the amount of computational effort they have provably expended. PoW and PoS (Proof of Stake) are the two best known consensus mechanisms and in the context of cryptocurrencies also most commonly used.bitcoin carding bitcoin price отследить bitcoin
bitcoin price bitcoin widget global bitcoin bitcoin nvidia plus500 bitcoin проект bitcoin bitcoin scripting bitcoin grafik monero обменять скачать bitcoin bitcoin россия сигналы bitcoin simplewallet monero casper ethereum количество bitcoin importprivkey bitcoin хайпы bitcoin
bitmakler ethereum group bitcoin monero amd bitcoin значок акции ethereum
уязвимости bitcoin trader bitcoin
roboforex bitcoin
battle bitcoin mastering bitcoin fox bitcoin ProsAccounting and auditingbitcoin pools neo bitcoin ethereum алгоритмы bitcoin timer bitcoin рбк bitcoin microsoft king bitcoin bitcoin daemon bitcoin update bitcoin коллектор
рост bitcoin bitcoin status bitcoin get bitcoin pay bitcoin blog bitcoin goldman api bitcoin bitcoin зебра bitcoin passphrase mac bitcoin сервер bitcoin usa bitcoin bitcoin s flypool monero
go ethereum bitcoin cards car bitcoin bitcoin 2020
bitcoin торговля
x bitcoin miningpoolhub ethereum bitcoin реклама удвоить bitcoin использование bitcoin краны monero
bitcoin euro
second bitcoin iso bitcoin cryptocurrency это 2016 bitcoin bitcoin котировки bitcoin neteller bitcoin auto bitcoin ммвб казино ethereum ethereum пул
bitcoin инвестиции обмен tether
bitcoin prominer nanopool ethereum bitcoin kurs bitcoin работа bitcoin protocol master bitcoin Broader study reveals power is not truly migrating to the 'makers' in most companies. According to a research initiative by MIT Sloan Management Review and Deloitte Digital, digitally maturing companies should be pushing decision-making further down into the organization, but it isn’t happening. Respondents in that study said they wanted to continually develop their skills, but that they received no support from their employer to get new training.korbit bitcoin bitcoin перевести monero график bitcoin википедия bitcoin crash bitcoin green
mining ethereum
сайты bitcoin ethereum доллар
bitcoin trader bitcoin создатель to bitcoin monero pro deep bitcoin rinkeby ethereum plus bitcoin boom bitcoin froggy bitcoin bitcoin cap bitcoin рублей bitcoin online
source bitcoin и bitcoin bitcoin zone
bitcoin apple bitcoin linux 50 bitcoin ethereum news альпари bitcoin bitcoin location bitcoin safe hashrate ethereum шахта bitcoin masternode bitcoin отзыв bitcoin sgminer monero bitcoin airbit
cryptocurrency calendar algorithm ethereum зарабатывать bitcoin Cryptocurrency Tradingrpc bitcoin ставки bitcoin bitcoin card bitcoin кранов bitcoin darkcoin калькулятор ethereum bitcoin карты bitcoin knots pay bitcoin tether отзывы php bitcoin monero simplewallet ethereum контракты bitcoin рейтинг bitcoin joker bitcoin master использование bitcoin monero logo
hash bitcoin bitcoin получение курс bitcoin ethereum transactions bitcoin motherboard описание bitcoin карты bitcoin
bitcoin чат money bitcoin bitcoin cryptocurrency bitcoin card bitcoin мастернода bitcoin fpga bitcoin avto google bitcoin bitcoin world 1080 ethereum bitcoin математика bitcoin биржа casper ethereum bitcoin 4 пул bitcoin bitcoin up monero cpuminer bitcoin black clame bitcoin my ethereum bitcoin farm bitcoin asic обмен tether abi ethereum адрес bitcoin mooning bitcoin script bitcoin
bitcoin brokers bitcoin dark dash cryptocurrency arbitrage cryptocurrency prune bitcoin сайт ethereum
вложить bitcoin bitcoin poker
secp256k1 bitcoin
