The Evolution of Cryptocurrency-Bitcoin. Cryptocurrency is a digital medium for exchange. It uses cryptographic techniques for its secure transactions. Cryptocurrency are also termed as digital, alternative and virtual currency. Physical currency uses centralized approach i.e. centralized banking. On the other hand cryptocurrency is decentralized. This decentralization is controlled by block chain. Block chain is public transaction data base.
Bitcoin in 2009 was the first cryptocurrency created. After that many cryptocurrencies have been created. According to Jan Lansky “cryptocurrency does not require a central authority and this system keep an eye of all the units and its ownership.” Ownership of cryptocurrency can only be proved by cryptographic hash functions that is a unique key with owner. When a transaction is made the system changes ownership of the units after verifying the Hash function or key with the first owner.
The Evolution of Cryptocurrency-Bitcoin
Cryptocurrency is created at a rate which is defined at the time of creation of the system and is publicly known. Whereas, in centralized system the production of physical money is controlled by Federal reserve system. While in decentralized system companies or governments can not produce new units of currency. Its technical system was created by group of individuals known as “Satoshi Nakamoto.”
Bitcoin operate in peer to peer networks. This means that anybody who is using bitcoin is a small fraction of bitcoin bank. Physical money is distributed by a bank but bitcoin does not have any bank so where did it came from.? Miners use special software to solve some algorithm in the network and in return they are awarded with bitcoin.
The most important thing in this decentralized system is its Blockchain or its data base. The validity of each coin is provided and verified by the blockchain. As soon as the currency/coin is generated its record is updated in the list in blockchain. This record is know as Block. The security of block is ensured by complex cryptography. Each block contain a hash pointer that points to the previous block. Block automatically update data in its record every time a transaction take places. Practically no one can force data changes in blocks not even its owner.
Future of bitcoins seems to be very bright as some of best companies in the world like Microsoft accepts bitcoins
In 2009 bitcoin was not traded in any exchange. While in 2010 it was traded for the first time. Its peak price by the end of December was 0.39 US dollars. Bitcoin reached top of the chart in December 2017 where one bitcoin worth was up-to 18000 USD. After that bitcoin experiences a crash fall in the first week of Feb 2018 when its price reached below 5000 USD.
No body exactly knows the reasons behind the fall of bitcoin. But after this dive many countries implemented some strict regulations regarding cryptocurrency. Even it is banned in some countries. Some analyst thinks that this dive of bitcoin is temporary and this is the best time for investment in it. They even call it virtual gold. Future of bitcoins seems to be very bright as some of best companies in the world like Microsoft accepts bitcoins.