Cryptocurrency is a digital currency that uses encryption (cryptography) to generate money and to confirm transactions. Transactions are added to a public ledger – also called a Transaction Block Chain – and new coins are created through a process known as mining.
As of 2017, cryptocurrency has been used as a decentralized alternative to traditional fiat currencies (which are usually backed by some central government) such as the US dollar (USD).
For the average person using cryptocurrency is as easy as:
Get a digital wallet to store the currency.
Use the wallet to create unique “public addresses” to receive currency.
Transfer funds in or out of your wallet using public addresses.
What is a cryptocurrency address?:
A public address is a unique string of characters used to receive cryptocurrency. Each public address has a matching private address that can be used to prove ownership of the public address. With Bitcoin the address is called a Bitcoin address. Think of it like a unique email address that people can send currency to as opposed to emails.
THE HISTORY OF CRYPTOCURRENCY
The first decentralized digital cryptocurrency can be traced back to “bit gold” (not to be confused with Bitgold), which was worked on by Nick Szabo between 1998 and 2005 but was never implemented.
Although bit gold is considered the first precursor to bitcoin, cryptocurrency pioneer David Chaum’s company DigiCash (a company founded in 1989 which attempted to innovate digital currency), Wei Dai’s b-money (a conceptual system published in 1998 which Satoshi cites it in the Bitcoin white paper), and “e-gold” (a centralized digital currency that started in 1996) are all notable early mentions.
With that history noted, modern digital currency starts in 2008 when Satoshi Nakamoto (an anonymous person and/or group) released their paper detailing what would become Bitcoin.
Bitcoin became the first decentralized digital coin when it was created in 2008. It then went public in 2009.
As of 2018, Bitcoin is the most commonly known and used cryptocurrency. Meanwhile, other coins including Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) and more are notable mentions including STEEM.
Given the popularity of Bitcoin as well as its history, the term “altcoin” is sometimes used to describe alternative cryptocurrencies to bitcoin (especially coins with small market caps).
As of January 2015, there were over 500 different types of cryptocurrencies – or altcoins – for trade in online markets. However, only 10 of them had market capitalizations over $10 million.
As of September 2017, there were over 1,100 cryptocurrencies and the total market capitalization of all cryptocurrencies reached an all-time high surpassing $60 billion! Then, by December 2017, the total market cap reached $600 billion (a multiple of 10 in only two months).
In other words, although the future is uncertain, cryptocurrency seems to be more than just a fad. Here in 2018 cryptocurrency is shaping up to be a growing market that (despite its pros and cons) is likely here for the long haul.