Fatema Motiwala, Sr. IP Analyst
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. It enables secure online payments without the use of third-party intermediaries. "Crypto" refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.
A cryptocurrency can be used as a digital form of cash to pay for everything from everyday items to larger purchases like cars and homes. It can be bought using one of several digital wallets or trading platforms, then digitally transferred upon purchase of an item, with the blockchain recording the transaction and the new owner. The appeal of cryptocurrencies is that everything is recorded in a public ledger and secured using cryptography, making an irrefutable, timestamped and secure record of every payment.
Many cryptocurrencies are decentralized networks based on blockchain technology. As blockchain is essentially a set of connected blocks or an online ledger. Each block contains a set of transactions that have been independently verified by each member of the network. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction histories.
Experts say that blockchain technology can be used in multiple industries, such as supply chain, and processes such as online voting and crowdfunding. Financial institutions such as JPMorgan Chase & Co. (JPM) are testing the use of blockchain technology to lower transaction costs by streamlining payment processing.
Bitcoin is a decentralized digital currency created in January 2009. Bitcoin is a one-way hash function and that secure hash algorithm or SHA-256 puts Bitcoin in a different lane, where you can share your bitcoin address without risking the security of your funds. A one-way hash function is a mathematical function that generates a fingerprint of the input, but there is no way to generate the original information twice. The core code is essentially set in stone in cyberspace and still functions without an administrator at the helm of its creation.Read More →
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