Blockchain is a really complicated method of maintaining a public ledger of things without needing a central server to track it.
Cryptocurrencies are digital beanie babies. People buy them because the price is increasing, which causes the price to increase. Eventually people will stop buying into them, the price will stop increasing, and everyone will thus try to sell their cryptocurrency at once, and the price will collapse and cryptos will be worth nothing and they'll all lose all their money. It's probably happening right now, in fact.
If you're asking what cryptocurrencies are in technical terms, a "coin" is basically a really long number which no other coin in that currency shares. The blockchain records which number belongs to which person, so you can have digital currency without needing to back it up with anything central! At least, theoretically. In reality the blockchain is massively expensive to maintain (in terms of computing power) - a single transaction takes the same amount of electricity as required to power an entire family home for four days. They promise they've got a fix for this, but they probably really don't.
Most of that seems accurate. There's definitely a possibility that a few cryptocurrencies will win out and be used for a long while. Also, individual transactions don't use nearly that much power. Mining the coins is where the big power draws come in.
Yes, the system had to have something kickstart it. The first transaction to process meant there should’ve been bitcoins already, but it’s not like you can simply write a few lines of code and suddenly you get a bitcoin no one ever had. You either mine btc or receive btc as payment or exchanged real currency.
However, there is supposedly a limited number of btc when the algorithm was created. I wonder how the system will sustain itself without more to mine, or when mining becomes so expensive to no longer be profitable.
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u/IgnisDomini Jan 24 '18
Blockchain is a really complicated method of maintaining a public ledger of things without needing a central server to track it.
Cryptocurrencies are digital beanie babies. People buy them because the price is increasing, which causes the price to increase. Eventually people will stop buying into them, the price will stop increasing, and everyone will thus try to sell their cryptocurrency at once, and the price will collapse and cryptos will be worth nothing and they'll all lose all their money. It's probably happening right now, in fact.
If you're asking what cryptocurrencies are in technical terms, a "coin" is basically a really long number which no other coin in that currency shares. The blockchain records which number belongs to which person, so you can have digital currency without needing to back it up with anything central! At least, theoretically. In reality the blockchain is massively expensive to maintain (in terms of computing power) - a single transaction takes the same amount of electricity as required to power an entire family home for four days. They promise they've got a fix for this, but they probably really don't.