Bitcoins and Cryptocurrencies An Introduction
A Cryptocurrency (or Crypto Currency) is a medium of exchange using cryptography to secure the transactions and to control the creation of new units. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. These are frequently called altcoins, as contraction of bitcoin alternative.
Cryptocurrencies typically feature decentralized control (as opposed to a centralized electronic money system, such as PayPal) and a public ledger (such as bitcoin's block chain) which records transactions.
Cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and publicly known. In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers. However, companies or governments cannot produce units of cryptocurrency and as such, have not so far provided backing for other firms, banks or corporate entities which hold asset value measured in a decentralized cryptocurrency.
The underlying technical system upon which all cryptocurrencies are now based was created by the group or individual known as Satoshi Nakamoto.
As of March 2015, hundreds of cryptocurrency specifications exist; most are similar to and derived from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: members of the general public using their computers to help validate and timestamp transactions adding them to the ledger in accordance with a particular time stamping scheme.
The security of cryptocurrency ledgers is based on the assumption that the majority of miners are honestly trying to maintain the ledger, having financial incentive to do so.
Most cryptocurrencies are designed to gradually decrease production of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This can mimic the scarcity (and value) of precious metals and avoid hyperinflation. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies are less susceptible to seizure by law enforcement. Existing cryptocurrencies are all pseudo-anonymous, though additions such as Zerocoin and its distributed laundry feature have been suggested, which would allow for anonymity.
There are numerous coins that are now ruling the market and depending on their Market Capitalization, demand and production they are valued in the Market. Some of them are Bitcoin, Litecoin, Dogecoin, Dash , Primecoin, Peercoin, Namecoin, Blackcoin and many others.
In this Post I will first deal with understanding what Cryptocurrencies are and how they are created, Currency Mining, Faucets, How they operate, and the scope of Bitcoin and Cryptocurrencies in the future. We will also dedicate a separate post for each currency, highlighting their Wallets, Faucets, Blockchain, QT , Online and Desktop Wallets and other finer points.
Look out for subsequent posts elaborating on each topic at length.
