CRYPTOSPACE BASICS TO KNOW: cryptocurrency, cryptography & bitcoin

1. Cryptocurrency

 Cryptocurrencies are just digital currencies, that means they are created using cryptography, coding and internet connections.

Cryptocurrencies are important because they solve the double-spending problem, so it is nearly impossible to counterfeit them.

They are usually stored on the blockchain, a decentralized ledger, so there is no need for a third parties like banks to manage the currencies, that means they are immune to government manipulation.

A currency fulfils three purposes: to serve as a mean of exchange, store of value and unit of account and a cryptocurrency, but using technology to make improvements .

Fiat currencies like the euro or the dollar are easy to fake and can be negatively  influenced by government or banks, but cryptocurrencies put the control of money in the right baskets, the hands of people, the consumers, security being provided by computers, so no human errors.

2. Cryptography

Cryptography is the science of securing communication.

Cryptography involves taking information and scrambling it in such a way that only the intended person who receive the information can understand the message.

The prosses of scrambling the message is called encryption and the unscrambling is called decryption and it is performed by complex mathematical techniques and computers

Cryptography tries to transmit information in a secure way and combat the actions of bad actors to manipulate or decrypt the information.

A simple example, used in the past, is to send a message using letters that were three letters after the letter they were supposed to represent, so ABC meant DFE.

*A more recent example that was the subject of the movie The Imitation Game was the effort during World War 2 of a group of  English cryptographers to decode the messages of Nazi Germany, which were encrypted by a coding device called the Enigma machine. One of them, who was a luminary in machine learning and artificial intelligence broke the Enigma code using technology.*

Cryptography is part of our lives, because every single password, WhatsApp message, credit card payment rellie on cryptography, and the cryptocurrencies too.

  3. Bitcoin

Bitcoin is considered a cryptocurrency that provides a system of decentralized trust for value transfer, better said a system of payments.

Bitcoin uses the Bitcoin Blockchain Network to make the transactions possible, so  there is no need for banks or other third parties to transfer money from one person to another, in whatever countries they are located. It rellies on the power of computers and cryptography.

Bitcoin disrupted the traditional way of global financial and technological systems.

Bitcoin is made for unbanked people to be able to send and receive money in form of a cryptocurrency and also in a pseudonymous mode, because their identities are presented as addresses, so it provides more inclusion and privacy. You just need a phone and an internet connection to transfer value using bitcoin in just minutes and with low transaction fees.

Bitcoin appeared in 2009 and was invented by Satoshi Nakamoto, an anonymous genius that disappeared and never revealed her, him or their identity.

Bitcoin was created because of the 2008 financial crises and the house market collapse that put many banks into bankruptcy and a lot of people suffered because of this. The crises appeared because banks wanted more money so they did some illegal or risky stuff to fool the investors and the average people paid the largest price.