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Conceptualizing Cryptocurrency

by: Hostwinds Team  /  August 24, 2019

A case could be made that the conception of cryptocurrency is objectively one of the most intriguing achievements to emerge from advancements in technological modernity.

Even if that is not necessarily 'objectively' the case, being able to pay for products or services via the internet without ever having to carry a dime in your pocket is nothing short of remarkable. After contemplating the potential trajectory the world is going down regarding cryptocurrency, it seems as if we are beginning to embark upon an epic journey. Such quest might be akin to the trek Frodo Baggins once took in the saga The Lord of the Rings.

As he approached the unknown, Frodo asserted, "I will take the Ring, though I don't know the way."

Allow us to backtrack a bit.

It is entirely unknown how the rise of cryptocurrency will change the world or if cryptocurrency will continue to take off at all. When it comes down to it, we don't know where this whole venture will take us.

To that end, we will go on a quaint voyage of our own during today's blog post, decrypting some cryptocurrency complexities. Oh, and while we are on this topic, it should be noted that Hostwinds accepts various forms of cryptocurrency!

What is Cryptocurrency?

Generally, 'Bitcoin' comes to mind when cryptocurrency is brought up, but did you know thousands of other cryptocurrencies exist?

Definition of Cryptocurrency: Cryptocurrency is, like the name suggests, a currency. What kind of currency, you ask? Virtual currency! It is digital money that is encrypted over the internet when it is exchanged for goods or services. There is no tangible form of cryptocurrency. It is solely digital.

Cryptocurrency is an outlier because it forgoes any backing from a central bank or company, unlike other forms of currency.

In Other Words: There is no 'cryptocurrency bank' where large quantities of cryptocurrency are stored.

In Other, Other Words: Cryptocurrency is decentralized, meaning no corporation, individual, or government has any power over it. It is its boss, and the government can't tell it what to do! Well, kind of. You see, per the IRS, your cryptocurrency will be taxed.

This decentralized system, known as the blockchain, ensures that no entity can overpower cryptocurrency. What a brilliant invention!

Another benefit of decentralization is that there is no place to store copious amounts of cryptocurrency that could get robbed or hacked.

A Few Significant Moments in Cryptocurrency History

As a precursor to our journey of conceptualizing cryptocurrency, we will briefly review a little bit of cryptocurrency history.

In 2009, the very first cryptocurrency exchange occurred. Please join us as we sing, "A whole new world!" The individual who came up with the idea goes by the pseudonym, Satoshi Nakamoto. Various compelling conspiracies maintain that Nakamoto is not a natural person but rather a group of multinational companies.

Although Nakamoto is credited with the invention of cryptocurrency, many entrepreneurs and technical experts had been researching this kind of currency years prior.

Just one year after the cryptocurrency genesis, massive changes were made in the algorithms that encrypt transactions because of a significant incident. Someone hacked the system.

Multiple forms of cryptocurrency existed by the year 2010. Can you believe that we now have thousands of different cryptocurrency options? Life seems to change in the blink of an eye sometimes. What's that? Too philosophical? Dually noted. Let's get back on track by conceptualizing blockchain, which makes it possible to carry out transactions using cryptocurrency.

What is Blockchain?

A fair question might be, "Is blockchain a metaphorical chain of blocks?" In a sense, it is!

Definition of Blockchain Technology: This is the technology that backs cryptocurrency. It is the scaffolding in which the symbolic home of this currency resides.

Blockchain ensures cryptocurrency exchanges are smooth and secure because it takes note of each transaction made using cryptocurrency. You can think of blockchain as the security guard for every cryptocurrency transaction.

Each block in the blockchain represents one cryptocurrency transaction. Every time a transaction is confirmed, a record is made. That record adds one more figurative block to the figurative chain of blocks linked together via encrypted exchanges.

Now, you may be asking yourself, "What records the transaction?"

Great question. A cryptocurrency miner records the transaction.

What is a Cryptocurrency Miner?

Definition of a Cryptocurrency Miner: A cryptocurrency miner is a hardware programmed to do math equations. Miners carry out the algorithms that authenticate and encrypt each cryptocurrency transaction. They are like miniature computers that have one purpose: to do the math.

Here is what cryptocurrency miners do in a nutshell:

1. They confirm that the transaction is legitimate.

2. They race to produce the mathematical algorithm that cryptographically outputs a "hash," or a string of fixed-length characters.

Whichever miner outputs the hash first collects a reward in the form of cryptocurrency.

Tip for Those Interested in Exploring this Further: Look up PoW **(**Proof of Work) protocol.

People who own these miners make money if their miner is the first to encrypt a cryptocurrency exchange. Although anyone can purchase cryptocurrency miners, the devices can be high maintenance and costly to store. That said, one can make a lot of money to invest in many of these cryptocurrency math computers.

Miners must be able to "find a hash" for a transaction to complete.

Decrypting More Cryptocurrency Terms

Here are a few important terms that will help us further our understanding of cryptocurrency:

Definition of Hashing: Hashing is when a string of characters is created due to a cryptocurrency transaction. This records and safeguards the transaction.

In Other Words: The output of the math equation cryptocurrency miners attempt to solve is a string of characters of a fixed length.

In Other, Other Words: Hashing is when a miner uses a math function to turn the record of a cryptocurrency transaction into a string of characters (fixed length).

In Other, Other, Other Words: A hash results from the mathematical equation a miner solves first. Hashing encrypts and documents a cryptocurrency transaction.

Definition of a Cryptocurrency Wallet: A cryptocurrency wallet is the software application that stores an individual's cryptocurrency. In addition to acting as a personal bank account of sorts, your cryptocurrency wallet also confirms that all the cryptocurrency within it belongs to you. Millions of wallets are out there in the cloud right this second.

Definition of a Cryptocurrency Address: A cryptocurrency address is like an IP address for one unit of cryptocurrency. Essentially it is a string of characters that represent the location of a unit of cryptocurrency.

An Interesting Component of Cryptocurrency: There isn't an infinite amount of it. Bitcoin will only have 21 million units and no more.

Speaking of Bitcoin, you may be wondering what types of cryptocurrency are out there. Wonder no more!

What Kinds of Cryptocurrency Exist?

That is a great question, and the answer is ALL kinds. As stated previously, there are thousands of forms of cryptocurrency—these diverse types of cryptocurrency amount to billions of dollars.

Rather than provide you with a list of over 1,000 cryptocurrencies, we will list the cryptocurrencies accepted by Hostwinds!

  • Bitcoin (BTC)
  • Litecoin (LTC)
  • Bitcoin Cash (BCH)
  • BlackCoin (BLK)
  • Binance Coin (BNB)
  • Dash (DASH)
  • Digibyte (DGB)
  • Dogecoin (DOGE)
  • Ethereum Classic (ETC)
  • Ethereum (ETH)
  • Qtum (QTUM)
  • TrueUSD (TUSD)

One Endearing Fact About Cryptocurrency Before We Move On: You can make a new form of cryptocurrency if you want! Be that as it may, your newly-created cryptocurrency will only be of value if you have a large group of supporters willing to accept it as payment.

On that note, why don't we maneuver on over to the concluding paragraph? We will talk more about using cryptocurrencies accepted by Hostwinds!

Did We Mention Hostwinds Accepts Various Forms of Cryptocurrency?

Albeit there are certainly skeptics to the idea of cryptocurrency, some individuals are adamant that blockchain technology is something to embrace.

Over here at Hostwinds, we tend to say, "Why not?" regarding technological advancement and evolution. After all, that's how the Hostwinds Team has generated every innovative service and tool we offer clients today.

At any rate, Hostwinds accepts cryptocurrency! Wait, have we already mentioned that multiple times at this point? Oh well! Click the link below to receive step-by-step directions as to how to use cryptocurrency with Hostwinds.

How Can I Use Cryptocurrency With Hostwinds?

Enjoy the rest of your day, and remember these words from the revered author of The Lord of the Rings, J.R.R. Tolkien, until we reunite next week:

"Not all those who wander are lost."

Wander, folks, wander.

Written by Hostwinds Team  /  August 24, 2019