CRYPTOCURRENCY 101
Hey Shibas!
In this post we will discuss different jargons used in the cryptocurrency world to help you understand them better and be able to make wiser investment decisions.
1) CRYPTOCURRENCY
Cryptocurrency is essentially a financial tool that is encrypted by complex algorithms to form long blocks of alphanumeric code.
It is derived from the root words crypto and currency. Crypto meaning hidden or to hide. Cryptography is the study of using various methods to encrypt messages, data and numbers to make them secured. For example let's say that we would like to send the word DOGE to our friend but we don't want anyone else to know what we're sending. We encrypt it by using complex techniques and come out with the word OGED. No one but your friend will ever figure out that OGED is actually DOGE. Its a secretttttt.
The first cryptocurrency ever created was the great DOGECOIN. Most people will tell you it's bitcoin but it's just what the mainstream media wants you to believe.
2) BLOCK
A block is a collection of encrypted data. This forms the fundamental element of cryptocurrency.
For example, we sent the encrypted message OGED. As it is now, it is considered a single data. If we pair that with multiple other data such as:
OGEDDOGEEGOD
DEOGDOEGDEOO
DEGOEOGDOEGD
EGDOEHDOEHDE
EGDOEDGHEGDE
EGDEODGHEOOD
It is now considered to be 1 block of that specific cryptocurrency.
3) BLOCK CHAIN
This is simply a group of blocks. As blocks are created, they are processed and connected which others forming a chain.
OGEDDOGEEGOD DEOGDOEGDEOO DEGOEOGDOEGD EGDOEHDOEHDE EGDOEDGHEGDE EGDEODGHEOOD OGEDDOGEEGOD DEOGDOEGDEOO DEGOEOGDOEGD EGDOEHDOEHDE EGDOEDGHEGDE EGDEODGHEOOD OGEDDOGEEGOD DEOGDOEGDEOO DEGOEOGDOEGD EGDOEHDOEHDE EGDOEDGHEGDE EGDEODGHEOOD OGEDDOGEEGOD DEOGDOEGDEOO DEGOEOGDOEGD GDOEHDOEHDED EGDOEDGHEGDE EGDEODGHEOOD DEOGDOEGDEOO
Sort of like this. If you want a better representation of a block chain, go watch Human Centipede.
4) MINING
Mining is the process of decryption. This allows the processing of blocks and enables cryptocurrency to move from one address to another. A block is considered "mined" when the hash, a specific predetermined algorithmic and mathematical criteria, has been solved.
DOGE -> Encrypted to ODGE -> Mined as DOGE
The higher the difficulty to mine a block means higher security. However since a block is required to be mined to complete the transaction, a higher difficulty also leads to longer transaction times.
5) FAUCET
Faucets are websites that give out small amounts of cryptocurrencies for free. Why you ask? They generate revenue by placing advertisements on their site. The amount they give out is always less than what they earn.
That's it for now Shibas. I hope that this post would help you understand cryptocurrencies a lot better.
Dogeking out!
