What is Cryptocurrency?

The development of digital currency or cryptocurrency is so fast and aggressive. Fundstrat Global tracks about 630 digital money on the market. That amount does not include digital money-based investment products. The development of financial technology began to shake financial services and the global payment system. However, what exactly is meant by this digital currency or cryptocurrency? Here's the review!

What is meant by Cryptocurrency (Digital Currency)

Cryptocurrency has existed about ten years ago and has now become quite popular, widespread, and surrounded by many controversies from innovative developments.

Quoting from the Coinmarketcap.com website, there are currently 904 types of crypto currencies and the most famous is Bitcoin.

This Bitcoin also managed to hoist the price of other crypto currencies. Cryptocurrency is a digital currency where transactions can be done online.

Unlike the printed paper currency, cryptocurrency is designed by solving mathematical problems based on cryptography.

Digital currencies are usually decentralized. That is, in general it is far safer than the centralized nature.

The value of cryptographic-based digital currency comes from its scarcity, and its creation process through complicated mathematical solutions, unique encryption values, and its trust and use also originates from the whole community.

Cryptocurrency which was the first to come and achieve success is Bitcoin, which was discovered by Satoshi Nakamoto. The success of Bitcoin is the initiator of the emergence of new types of cryptocurrency that are trying to compete with Bitcoin.

The market capitalization of Bitcoin and several other popular cryptocurrency such as Litecoin, Ethereum, Dogecoin, is rapidly approaching US $ 100 billion, equivalent to Rp1,334 trillion.

How does Cryptocurrency work?

Satoshi Nakamoto has managed to find a revolutionary system that is a system that serves to facilitate decentralized digital money transactions.

A decentralized money system is a network capable of connecting its users without the need for intermediaries or third parties or central authorities such as banking or government.

Only with an Android-based smartphone or laptop connected to the internet, you can send and receive money anywhere and everywhere in the world.

Interestingly, this can be done anytime and anywhere, regardless of bank work days or government workdays, there is no downtime and transactions can be done in minutes.

The problem we are facing in a centralized system is related to the need for more costs to pay services to third parties as intermediaries.

In addition, the role of the third party which is now played by the bank or government must consist of a set of rules and certain restrictions, so that it can be said that it is still far from efficiency and effectiveness.

This problem is what technology is trying to solve that is now being introduced with the name Blockchain.

Here is a further explanation of the blockchain :

Blockchain is a platform where cryptocurrency digital currencies are run.

Cryptocurrency, the derivative vocabulary of the word cryptography (cryptography), refers to an agreement from the users and the storage process that is secured by strong passwords.

The function of blockchain technology is to manage and maintain every addition of data stored on each block.

Blocks that store data will relate to each other and form a decentralized network or peer to peer networks (P2P). On the blockchain, any data that has been stored or recorded cannot be edited or falsified. Simply put, this system allows you to send gold via email.

P2P network is an agreement network, therefore this system is able to present a new and efficient payment system and transaction process in the form of digital money.

As an illustration, cryptocurrency like Bitcoin consists of independent networks. Each independent network has a complete record of the history of all transactions that occur and every balance held by each account owner of Bitcoin.

At the end of each transaction and after confirmation, a transaction will be immediately, known to all networks connected to the blockchain network.

A transaction will always contain an explanation that a transaction has occurred from A giving a number of Bitcoin to B and then digitally signed by A by giving a private key (in alphanumeric password) into the system.

After being signed by A, the transaction will be automatically announced on the network. This information is sent from one independent network to all the other independent networks that are incorporated in the system. Confirmation is the most crucial and critical stage in the cryptocurrency system.

Confirmation is everything. When a transaction is not confirmed, there will be a possibility that the transaction is being hijacked or falsified. When a transaction has been confirmed, the transaction will be stored in a place called "Blocks".

Records about these transactions cannot be contested, cannot be changed and cannot be hijacked or falsified. Note that the transaction has been considered as a permanent record of the overall history of the transaction, this is called Blockchain or the block chain.

The blockchain may be said to be similar to a ledger available in a network or online, where each transaction is recorded and can be seen by all internet network users.

The difference with banking, bank ledgers are stored and owned by the bank itself, while on the blockchain everyone even those who are not users can access the ledger. This series of processes actually shows that cryptocurrency does not need humans or trust between its users.

Only by using security is a complex mathematical algorithm that promises security and the impossibility of being manipulated.
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