Archive for November 21st, 2013

November 21, 2013

Cryptocurrency

A cryptocurrency is a peer-to-peer, decentralized, digital currency whose implementation relies on the principles of cryptography to validate the transactions and generation of the currency itself. They often use a proof-of-work scheme to guard against digital counterfeiting. While over 30 different cryptocurrency specifications and protocols have been defined, most are similar to and derived from the first fully implemented cryptocurrency, Bitcoin, created in 2009 by pseudonymous developer Satoshi Nakamoto

Most cryptocurrencies are designed to gradually introduce new units of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This is done both to mimic the scarcity (and value) of precious metals and to avoid hyperinflation. Cryptocurrencies are also less susceptible to seizure by law enforcement than traditional currencies. Early attempts to integrate cryptography with electronic money were made by David Chaum, via DigiCash and ecash, which used cryptography to anonymize electronic money transactions.