Cryptocurrency basics and the Secrets of Coinmarket

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To understand cryptoworld and Coinmarket you should know the history of money.

History of Money

Earlier man  used  to barter  with goods which he had  extra. He used to get things which he have less.For example if I have 10 cattles. I can exchange one of them for one handful of grain. As he found it as practically difficult man opted for other methods. He tried gold,seashells etc before getting into  common currency system.But now the problem of trust arose. Someone had to check his transactions. Thus banks came into picture.

Banks the system

Then banks has evolved. They started giving creditcards. They started giving loans . But if he failed to return it  back they attached his property.They started to artificially inflating and deflating economy. People lost their life  holding just because of that .Banks started monitoring each and every transaction.Privacy was lost. They raised minimum balance needed in account. They vanished currencies in midnight.They attached all accounts to Pancard.

A digital world

In the meanwhile another thing was happening in the world. It was changing itself into a digital world.Mail changed to  email.Friendships changed into facebook groups.Cheques changed into online banking. So naturally a necessity and thought of a decentralized digital currency arose.

Internet banking or  credit card  is not  digital currency.  It is only a digital method of transaction.  Digital currency  is a system in which transaction can be done without intermediate service of a bank. Its just like you give 1 lakh rupees to your brother. You are not going for bank to transfer money, are you?But how can you give a money to an unknown person? That too without the documentation from bank. Who would dare to do it without any documentation. Nobody will.right? But he finally found answer for these problems and that answer was Bitcoin!

Need of the virtual Gold

Satoshi Nakamoto  is the inventer of bitcoin. He is  a mysterious person.  For unknown reason he  is keeping his identity hidden still.   The attempts for making a digital currency failed before that. The problem they have to face is  double spending. For example I have an apple and if I give it to you I have zero apple and you have one apple. But if I have a digital apple (apple made using some codes) and I give it to you I can make another apple using the same code. It will lead to crash of whole system and economy. I also  don’t want an intermediary authority to monitor my transactions.

An idea born

Cryptocurrency works as decentralized network. That means there is no common authority.It will not trust anybody. Maths is used to make complex Crypto algorithms .  The only way systems in the network can keep track of spending is only by updating all systems simultaneously.  For example if A,B and C is in the network.  If A gives an apple to C it should be updated in all systems. This is important as there is no central authority to monitor it.  But still  even if there is a minor disagreement between systems it will lead to crash of whole network.

Thus  cryptocurrency was  a  dream.This was  until Satoshi found a way where an mutual agreement could be reached between the systems. That too   without a central authority.So if A transact  1 bitcoin to B the transaction will be send through the whole system. Everybody in the entire network can see this transaction.But theoretically it can still be changed. But now it must be confirmed. After confirmation it cannot be altered. It is the job of people calling themself miners.

Miners into action

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Miners will confirm the transaction and add it to a historical record called blockchain. For this miners should solve a mathematical puzzle known as proof-of-work problem.By doing this the first person who solving the puzzle would get reward. It will be inform of  digital currency. This is the only way new currencies can be mined out in whole system.

The verified transactions are stored in the public blockchain so that everybody can see.  But no one will be able  to  alter it here after .   The transaction will not be in our  real name. But a random combination of alphabets and digits.But after each mining the difficulty of puzzle increases. So it  will became harder and harder for the miners to mine new digital currencies.Other way they can earn is by transaction fees. This fees  we need to pay as bitcoin during each transaction. There is predetermined limit for all cryprocurrencies that can exist in earth .

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Altcoins and coinmarket

Various cryptocurrencies are born after Bitcoin was  founded by Satoshi like Ethereum,Ripple,Monero etc. Currently more than 1000 altcoins(alternate coins other than bitcoin) are there in coinmarket.    Some of them serve good function and might have good future. But many  are bogus coins in coinmarket.But if it was good it had a tremendous  growth compared to sharemarket.

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