Note: if you don't feel like reading this whole post check the BITCOIN Infographic!
CryptoCurrency is a form of decentralized electronic currency, but what does it mean "decentralized"? Allow me to draw a parallel to Torrents. Torrent's are a form of peer to peer filesharing that is also decentralized. It is a way to share a file with multiple people in multiple places just like any other filesharing program but it adds a level of decentralization that allows it to divide up the burden among multiple sharers, also known as ’seeders’.
In direct file downloads, the data comes from a single source, in contrast torrent's work by having multiple file holders deliver pieces of the whole file so that the parts may be reassembled on the download end, you might have some concerns about this file format. What is to stop an uploader from corrupting part of the file and loading a virus on the downloader’s side? Torrent clients check their work against the other files uploaded. Since multiple user’s have the file there is a easy way to tell if one of the tiny parts downloaded on your end has been messed with. Make’s sense right? Let’s return to Cryptocurrencies now.
CryptoCurrencies rely on many of the same principles that Torrents do. Cryptocurrencies rely on a decentralized network of computers that are used to process movement only instead of the movement of files, the movement of the currency itself is tracked. This decentralized network is called the Block Chain. The Block Chain acts as a proof of work, what this means is that multiple computers on the chain must confirm that a transaction has taken place before it is considered a genuine movement.
The transactions are processed by members of the Block Chain known as ‘Miners’. These are the members that are charged with the discovery of new units of currency by solving complex algorithms that encrypt the location of the units along the block chain. In many ways they are the backbone of the network and allow for all transactions to take place, thus they are granted the incentive of currency discovery so that the integrity of the network can remain intact. Each Cryptocurrency has it's own specifications, but usually after a block has been "mined", the miner is rewarded with coins, bringing coins into existance this way. The longer the block chain gets, the harder it becomes to make a new coin, and the less coins come into existence each time. Rising the value of the coin through simple rules of offer and demand.
Since multiple miners are checking the block chain against their own records there isn’t a great deal of room to cheat. The block chain itself is rather secure, it isn’t possible to hack without first hacking every computer on the network which would mean the entire internet itself is compromised or a global power outage has occurred.
But What are the benefits? CryptoCurrency is honestly an economist’s dream. It allows for endless experimentation in monetary policy much like a laboratory allows scientists to test theories in a vacuum by isolating individual variables and tweaking them. Many people see the number of Crypto options and shy away. They make claims that they are all just schemes to make money for the developer, many of them are. In fact i will eventually make a post in Intruja 101 about how to create a SCAM coin! But there are also many that are experimenting with the technology in an attempt to discover what works and what doesn’t. One thing is certain, the current centralized policies that are the norm in this day and age are unsustainable, open for corruption, and utilized to the benefit of a select few. The Block Chain prevents this. It is transparent, honest, and impossible to penetrate. It favors no individual group and everyone must play by the same rules.
Decentralization is key to the continuity of society.
As we grow as individuals, nations, and a species as a whole, we must be wary of centralized control. These mechanisms are open to corruption, easily managed by a few and allow for the many to be leeched off of. Prior to the internet, we relied on these centralized machines for support but we always recognized that they were vulnerable to these vices. The internet allows for a growth and evolution that we cannot ignore.
CryptoCurrency is a form of decentralized electronic currency, but what does it mean "decentralized"? Allow me to draw a parallel to Torrents. Torrent's are a form of peer to peer filesharing that is also decentralized. It is a way to share a file with multiple people in multiple places just like any other filesharing program but it adds a level of decentralization that allows it to divide up the burden among multiple sharers, also known as ’seeders’.
In direct file downloads, the data comes from a single source, in contrast torrent's work by having multiple file holders deliver pieces of the whole file so that the parts may be reassembled on the download end, you might have some concerns about this file format. What is to stop an uploader from corrupting part of the file and loading a virus on the downloader’s side? Torrent clients check their work against the other files uploaded. Since multiple user’s have the file there is a easy way to tell if one of the tiny parts downloaded on your end has been messed with. Make’s sense right? Let’s return to Cryptocurrencies now.
CryptoCurrencies rely on many of the same principles that Torrents do. Cryptocurrencies rely on a decentralized network of computers that are used to process movement only instead of the movement of files, the movement of the currency itself is tracked. This decentralized network is called the Block Chain. The Block Chain acts as a proof of work, what this means is that multiple computers on the chain must confirm that a transaction has taken place before it is considered a genuine movement.
The transactions are processed by members of the Block Chain known as ‘Miners’. These are the members that are charged with the discovery of new units of currency by solving complex algorithms that encrypt the location of the units along the block chain. In many ways they are the backbone of the network and allow for all transactions to take place, thus they are granted the incentive of currency discovery so that the integrity of the network can remain intact. Each Cryptocurrency has it's own specifications, but usually after a block has been "mined", the miner is rewarded with coins, bringing coins into existance this way. The longer the block chain gets, the harder it becomes to make a new coin, and the less coins come into existence each time. Rising the value of the coin through simple rules of offer and demand.
Since multiple miners are checking the block chain against their own records there isn’t a great deal of room to cheat. The block chain itself is rather secure, it isn’t possible to hack without first hacking every computer on the network which would mean the entire internet itself is compromised or a global power outage has occurred.
But What are the benefits? CryptoCurrency is honestly an economist’s dream. It allows for endless experimentation in monetary policy much like a laboratory allows scientists to test theories in a vacuum by isolating individual variables and tweaking them. Many people see the number of Crypto options and shy away. They make claims that they are all just schemes to make money for the developer, many of them are. In fact i will eventually make a post in Intruja 101 about how to create a SCAM coin! But there are also many that are experimenting with the technology in an attempt to discover what works and what doesn’t. One thing is certain, the current centralized policies that are the norm in this day and age are unsustainable, open for corruption, and utilized to the benefit of a select few. The Block Chain prevents this. It is transparent, honest, and impossible to penetrate. It favors no individual group and everyone must play by the same rules.
Decentralization is key to the continuity of society.
As we grow as individuals, nations, and a species as a whole, we must be wary of centralized control. These mechanisms are open to corruption, easily managed by a few and allow for the many to be leeched off of. Prior to the internet, we relied on these centralized machines for support but we always recognized that they were vulnerable to these vices. The internet allows for a growth and evolution that we cannot ignore.
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