What is Cryptocurrency (Digital currency)?

The development of digital currency or cryptocurrency is so fast and aggressive.

Fundstrat Global Tracks There are about 630 digital money in the market. That amount does not include digital money-based investment products.
The development of this financial technology began to shake financial services and global payment systems.

However, what exactly is this digital currency or cryptocurrency? Here's the explanation!

What is Cryptocurrency (digital currency)

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

Quoting from the site Coinmarketcap.com, there are currently 904 types of cryptocurrencies and the most famous is Bitcoin.

Bitcoin also manages to increase the price of other cryptocurrencies.

Cryptocurrency is a digital currency where transactions can be done in the network (online).

Unlike printed paper currencies, cryptocurrencies are designed to solve mathematical problems based on cryptography.

Digital currencies are usually decentralized. This means that it is generally much safer than a centralized one.

The value of cryptographic-based digital currency comes from its rarity, and its creation process through complicated mathematical solutions, its encryption value is unique, and its belief and use is also derived from its overall community.

The first Cryptocurrency to present and succeed was Bitcoin, which was discovered by Satoshi Nakamoto.

This success of Bitcoin has become the initiator of new types of cryptocurrencies that are trying to compete with Bitcoin.

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

How does Cryptocurrency work?

Satoshi Nakamoto has successfully discovered a revolutionary system of systems that serve 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.

With only an Android-based smartphone or internet-connected laptop, you can send and receive money from anywhere and anywhere in the world.

Interestingly, it can be done anytime and anywhere, not depending on the bank's working day or government business day, no downtime and transactions can be made 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 third party role that is now played by the bank or the government must consist of a certain set of rules and limitations, so it can be said to be far from efficiency and effectiveness.

The problem that is tried is resolved by the technology that is now introduced with the name Blockchain.

Here's a further explanation of the blockchain:

Blockchain mechanisms

Blockchain is a platform where cryptocurrency digital currency is executed.

Cryptocurrency, a derivative vocabulary of the word Cryptography or cryptography (the language of the grammar), refers to a deal of users and the storage process secured by strong passwords.

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

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

Blocks that store that data will relate to each other and form a decentralized network or peer to peer Networks (P2P).

In the blockchain, any data that has been stored or recorded cannot be edit or forged.

Simply put, this system allows you to send gold via email.

The P2P network is a network of agreements, therefore the system is able to present a completely new and efficient payment system and transaction process in the form of digital money.

As an illustration, cryptocurrencies like Bitcoin consist of self-contained networks.

Each of these independent networks has a complete record of the history of all the transactions incurred as well as any balances owned by each Bitcoin owner's account.

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 the transaction has occurred from A giving a certain amount of bitcoins to B and then digitally signed by A by providing A private key (in the form of an alphanumeric password) into 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 hacked or forged.

When a transaction is confirmed, the transaction will be stored in a place called "Blocks".

Records of such transactions may not be contested, irreversible and cannot be hacked or forged. The record of such transactions has been deemed to be a permanent record of the history of the entire transaction, this is called the Blockchain or block chain.

Blockchain may be said to be similar to the general ledger that is available in the network or online, where each transaction is recorded and viewable by the entire user of the Internet network.

The difference with banking, the bank's ledger is stored and owned by the bank itself, while on the blockchain everyone even that is not the user can access the ledger.

This series of processes actually demonstrates that cryptocurrency does not require any human or trust among its users.

Only using safeguards is a complex mathematical algorithm that promises security and impossibility to be manipulated.