A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.

Every transaction is a file that consists of the sender’s and recipient’s public keys (wallet addresses) and the amount of coins transferred. The transaction also needs to be signed off by the sender with their private key. All of this is just basic cryptography. Eventually, the transaction is broadcasted in the network, but it needs to be confirmed first.

Within a cryptocurrency network, only miners can confirm transactions by solving a cryptographic puzzle. They take transactions, mark them as legitimate and spread them across the network. Afterwards, every node of the network adds it to its database. Once the transaction is confirmed it becomes unforgeable and irreversible and a miner receives a reward, plus the transaction fees.

Essentially, any cryptocurrency network is based on the absolute consensus of all the participants regarding the legitimacy of balances and transactions. If nodes of the network disagree on a single balance, the system would basically break. However, there are a lot of rules pre-built and programmed into the network that prevents this from happening.

Altcoins are the various alternative cryptocurrencies that were launched after the massive success achieved by Bitcoin. Literally, the term means alternative coins - that is – other than bitcoins. They were launched as enhanced substitutes of bitcoin with the claims to overcome some or the other pain points of bitcoin. Litecoin, Bitcoin Cash, Ethereum and Stellar are common examples of altcoins. Though each has tasted varying levels of success, none of them have managed to gain popularity akin to bitcoin.

Crypto tokens are special kind of virtual currency tokens that reside on their own block-chains and represent an asset or utility. For example, one can have a Crypto token that represents x number of customer loyalty points on a block-chain that is used to manage such details for a retail chain. There can be another Crypto token that gives entitlement to the token holder to view 10 hours of streaming content on a video-sharing block-chain. Another Crypto token that may even represent other cryptocurrency, like one such token being equal to 15 bitcoins on a particular block-chain. Such Crypto tokens are tradable and transferable among the various participants of the block-chain.

Copyrights 2018. getFIFO All Rights Reserved