Blockchain technology has created an industry worth hundreds of billions of dollars and has launched a wave of innovations in distributed systems, crypto and economics. Some believe that block chains will become an integral part of the future of money, governments and the Internet. Others argue that it is a transitional bubble and that crypto-currencies will be overshadowed in history.
The original vision of cryptocurrencies is transparent and trustless money for and by people. A cryptocurrency that seeks to be "digital cash" and replace currencies and cryptos of the world, you need the following attributes: Two people interested in transacting with each other switch hands directly.
They are physically present, and therefore can easily verify Authenticity and No double spending.
Blockchains define a protocol that allows two individuals to transact with one another in a “peer-to-peer” manner It should be taken into account that an unreliable system does not completely eliminate trust, but rather distributes it to an economy that encourages certain actions. In these cases, trust is kept to a minimum, but not removed.over the Internet. When you digitally transfer value from one account to another on the blockchain, you’re trusting the underlying blockchain system to both enable that transfer and ensure sender authenticity and currency validity.
Cryptocurrency and its 4 key characteristics
1 Trustless
No need to trust peers. Transparency (at least between the parties) is necessary for doing business without a "trusted" intermediary (for example, a bank that charges a lot of commissions).
In a trustless environment, there is no single entity that has power over the system, and consensus is reached without the participants knowing and trusting anything but the system itself.
It is important to consider that trustless systems do not completely eliminate trust, but rather distribute it in an economy that encourages certain behavior. In such cases, trust is kept to a minimum, but not eliminated.
2 Decentralized and censorship-resistant
In a "centralized" system, we trust a single third party to act as an intermediary that guarantees these two properties; In a "decentralized" system, our trust is elsewhere, that is, in public-key cryptography and in a consensus mechanism that allows us to determine the truth.
Currently, the "proof of work" and the "proof of stake" are common protocols of the consensus mechanism, with strengths and weaknesses.
The idea of Censorship resistance is that no nation state, corporation or third party has the power to control who can make transactions or keep their wealth online. Censorship-resistance ensures that the laws that govern the network are set in advance and cannot be retroactively changed according to a specific agenda.
3 Private
Transparency isn’t always a good thing.
For privacy coins to work without a complete governmental collapse, there
will need to be certain auditable information. Coins that encrypt their transactions using zero-knowledge proofs or similar technology. But beyond the basics,
sharing economic status with the world seems a recipe for disaster.
4 Stable
For a massive adoption, we need stable cryptocurrency. You can't buy things,pay wages or expect them to work with rapidly changing conversion rates. To maintain price stability, a management structure similar to DAO, a digital Decentralized Autonomous Organization may be necessary. However, to date, this has not been properly designed and needs a lot of work to do.
We have proposed a system for electronic transactions without relying on trust.
— Satoshi Nakamoto“Bitcoin: A Peer-to-Peer Electronic Cash System”
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