Cryptocurrency is the digital money that is used to make online and offline transactions. This digital currency was first introduced by an anonymous hacker who goes by the name Satoshi Nakamoto back in 2009. The cryptocurrency concept has picked up rapidly and has revolutionized the entire internet world today. This article talks about Cryptogic, which introduced the cryptocurrency in its simplest form, so you can understand what it really means and why it has become so popular all over the world.
The History
Currency as we know it began as an idea in the minds of people. The first known use of currency was in China around 1000 BC. Since then, currency has taken many different forms, from gold and silver to paper money. Since then, hundreds of other cryptocurrencies have been created. One of the most popular cryptocurrency is Bitcoin. Bitcoin is a type of digital currency that exists solely on computers and can be transferred between them anonymously without any middleman or government involvement. Bitcoins are not printed but rather mined by people running specialized computer programs that compete with each other to solve mathematical problems while verifying transactions done with bitcoins which gives them coins as a reward for their work. Mining is how new bitcoins are made, currently at a rate of 25 new bitcoins every 10 minutes until 2020 when this will halve to 12.5 every 10 minutes (source). But how do you actually buy these valuable virtual coins?
In order to buy bitcoin you need an account with Coinbase which provides us with two steps- inputting your bank account information and verifying your identity through submitting some documentation such as identification card or passport, bank statement etcetera. Thereafter you can purchase bitcoin via USD/EUR wire transfer, credit card (VISA/MasterCard), SEPA transfer or Interac e-Transfer.
The Dilemma
You’ve probably heard of Bitcoin, Ethereum, and Litecoin. So, what exactly is cryptocurrency? It’s a way for people to buy goods and services anonymously, without being tracked by central banks or governments. It’s also a way for people with international money issues to have an easier time sending money abroad. Theoretically, it can be used anywhere in the world because you’re only limited by your imagination! It has been difficult for me to spend my bitcoins because I don’t want them converted into pounds (the currency in the United Kingdom). I’m just hoping that one day there will be enough businesses where I live so I can spend my coins easily. There are some positives though. Since bitcoin transactions cannot be reversed, it’s more safe than credit cards when shopping online. In other words, if you send someone bitcoin and they never receive it, there is no way to recover the lost funds unlike when using a credit card which may offer buyer protection in certain cases.
Private Key Encryption
A private key is a cryptographic key that should never be shared with anyone. A private key is used to sign transactions and decrypt messages. The private keys are what you use to prove ownership of your bitcoins and spend them. Bitcoins are received using public keys. When people send you bitcoins, they aren’t sending the coins from their address to yours; they’re actually sending them from one of their addresses to an address associated with your private key. So if someone steals your private key, they can control all the funds in all of your wallets. If someone gets hold of your private key for just one bitcoin address, then it’s as if they have access to 100% of your funds on any exchange where you do not have 2-factor authentication enabled. If this happens, don’t worry! Just like in a real life scenario where somebody has stolen something valuable from you – go through our checklist to get back on track quickly and easily!
Public Key Encryption
In order to ensure that only the intended recipient can read a message, public key encryption can be used. Public key encryption uses two keys, a public key and a private key. Everyone has access to the public key, which is used to encrypt messages. Person A would use person B’s public key to encrypt a message if they wanted to send it to person B. Person B would then use their private key to decrypt it once they receive it. The best part about this is that each time a message is sent with public key encryption, there are two keys generated; one for the sender and one for the receiver. The messages are scrambled so even if someone intercepts them on their way through cyberspace no one will be able to decipher them unless they have both of the corresponding private/public keys. However, the drawback to public key encryption is that when person A sends a message encrypted with person B’s public key, they must share their own private key as well in order for person B to decrypt it. Therefore, anyone who steals your private key would also be able to read any messages you’ve ever encrypted.
How do you connect two private keys?
The answer, is blowin’ in the wind. But to be more specific, A key part of cryptocurrency is blockchain technology, which is a distributed ledger enforced by a disparate network of computers. In order to connect two private keys, you must first have a public key. The public key is derived from the private key and is used to create a digital signature. To verify the authenticity of the transaction, a digital signature is used. So how do you connect two private keys? You combine them with a mathematical function! To decrypt data, you need to know the algorithm and the key. For example, if someone sends me an encrypted message through email I would use their public key (which I already had) and use it to decrypt their message. If they want to send me money they would use my public key and encrypt the amount they want to send me so that only I can read it. If I want to withdraw money from my account all I have to do is provide two things: a password and the matching private key. Once those are provided, there’s no way anyone can stop the withdrawal because even if they steal your password or your phone they still don’t have your unique private key.