Crypto… What? and How does it work?

Crypto… What? and How does it work?

 Crypto Currency, what is it and how does it work?

Crypto currencies are a new way of transferring money across the Internet.

*We begin by giving all the credit to this post to it’s originator and the original article. I still believe that the information is vital to Eliminate the Confusion that surrounds this topic. My thanks goes out to Scott Maxwell for his time and expertise. The original article was written in June of 2014. Many more issues have been resolved since that time.

This is Part 3 of a 4 part series. If you missed the beginning you can catch up right here:  Part 1          Part 2

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Crypto currencies rely on cryptography not only to ensure anonymity but also to provide a secure peer-to-peer network for the transfer.

In such a transfer, traditional cash is exchanged for the crypto currency at an online exchange (wallet).  It is then transferred across the network to the new owner.  The new owner can choose to hold the crypto currency, or to convert it back into cash. Because of the nature of the cryptography used neither party needs to trust the other and neither party needs to divulge their identity.  Moreover, the transfer is irreversible and does not need to go through a bank or third party.

What does a crypto currency coin ‘look’ like?

Crypto currency or ‘digital’ coins are numbers in the publicly held history of that currency.  This history shows all transactions carried out since it was created.  Anyone can claim ownership of these digital coins if they can prove two things. The first is that the history on public record shows an unbroken chain of transactions right back to the initial one which originally created the coins. The second is that the digital coin is currently linked to a unique encryption key. If the claimant has this key they can prove that the chain is unbroken, and can add the next transaction to the chain.  This allows them to transfer the digital coins to someone else.

What are Crypto currencies worth?

The cost to buy crypto currencies is set by an open market.  These markets match up buyers with sellers; both are free to negotiate a price they’re happy with.  Exchange rates can vary from day-to-day and transaction-to-transaction.

Recent speculation has seen some crypto currencies undergo triple digit by inflation.  Bitcoin, the most popular crypto currency, was first traded in May 2010, reached party with the US dollar in February 2011, and currently trades for just under $1000. (as of 12-28-2017 it is currently at $14,283.60, forecast predict 2018 to be even more spectacular)

This video may make Crypto currency even easier to understand…

 

Please let me know if this information is helpful and as always Stay tuned and be sure to FOLLOW over in the lower right corner.

Dan McHone

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