Evolution and History of Cryptocurrency



Cryptocurrencies are often incredibly confusing; however, they are common in numerous debate topics. This post aims to provide a background for understanding cryptocurrencies and provide additional resources to bolster your knowledge base! 

  • At its core, blockchain technology is a shared database where entries require confirmation and encryption before entering the common server. Thus, the process is highly secure, protected, and guaranteed accuracy, making it an enticing prospect for financial and banking processes. 
  • Cryptocurrencies are digital currencies that mirror the role of a dollar bill in the physical market. While there have been numerous iterations of different digital currencies, the creation of bitcoin in the late 2000s popularized the idea.
  • . Just as an individual works to bring home a paycheck, cryptocurrencies also require work. However, instead of holding a job and having established hours, individuals “work” for cryptocurrencies in the form of “mining” for bitcoins. The creator/s (the actual inventor is still unknown) of bitcoin, Satoshi Nakamoto, ensured that there would only be 21 million bitcoins in existence. 
  • Thus, the currency will never experience inflation; however, a cyberattack or breach in a bitcoin wallet could destroy an individual’s wealth with little hope for reconciliation. Bitcoin “miners” solve mathematical problems that unlock more bitcoins, verify transactions, or prevent fraudulent activity—the more miners on the market equates to faster and more reliable transactions. 
  • Blockchain technology hinges on cryptographic hash functions that “chain-link” blocks. The hash functions perform two vital roles within blockchain technology. Firstly, hash functions are asymmetric, meaning an input message is compressed into a predetermined length or “hash value." Secondarily, hash functions are deterministic, meaning that regardless of the input, there is only one resulting hash. The same input value always produces the same hash value
  • Cryptocurrencies also rely on public and private keys to verify and generate spending transactions. A private key is randomly created by an individual’s digital wallet while a public key is similar to an account number and linked to the private key. 
  • Benefits of Crypto:  Emerging companies envision blockchain technology to enhance and create markets for electricity trading. Others propose capturing blockchain to pay for charging electrical vehicles and generate funding for clean energy. 
  • Benefits in transactions: 
    • more secure 
    • remove intermediary and save costs 
    • reduce extraneous expenses 
    • no taxing system
  • Concerns: 
    • lack of women representation in the industry 
    • provide terrorist organizations and non-state actors access to currency
    • Lost bitcoins are impossible to recover 
Additional Resources: 

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