Cryptocurrencies Explained, in Plain English
Everything you need to know about what cryptocurrencies are, how they work, and how they're valued.
Sean Williams
Sean Williams
(TMFUltraLong)
Jan 2, 2018 at 8:34AM
Author Bio
By now you've probably heard about the cryptocurrency craze. Either a family member, friend, neighbor, doctor, Uber driver, sales associate, server, barista, or passer-by on the street, has probably told you how he or she is getting rich quick with virtual currencies like bitcoin, Ethereum, Ripple, or one of the lesser-known 1,300-plus investable cryptocurrencies.
But how much do you really know about them? Considering just how many questions I've received out of the blue from the aforementioned group of people over the last month, the answer is probably, "not a lot."
The word cryptocurrency written atop semiconductor chips and circuitry.
IMAGE SOURCE: GETTY IMAGES.
Today, we'll change that. We're going to walk through the basics of cryptocurrencies, step by step, and explain things in plain English. No crazy technical jargon here. Just sticks and stones examples of how today's cryptocurrencies work, what they're ultimately trying to accomplish, and how they're being valued.
Let's get started.
What are cryptocurrencies?
Simply put, cryptocurrencies are electronic peer-to-peer currencies. They don't physically exist. You can't pick up a bitcoin and hold it in your hand, or pull one out of your wallet. But just because you can't physically hold a bitcoin, it doesn't mean they aren't worth anything, as you've probably noticed by the rapidly rising prices of virtual currencies over the past couples of months.
How many cryptocurrencies are there?
The number is always changing, but according to CoinMarketCap.com as of Dec. 30, there were around 1,375 different virtual coins that investors could potentially buy. It's worth noting that the barrier to entry is particularly low among cryptocurrencies. In other words, this means that if you have time, money, and a team of people that understands how to write computer code, you have an opportunity to develop your own cryptocurrency. It likely means new cryptocurrencies will continue entering the space as time passes.
Why were cryptocurrencies invented?
Technically, the idea of an electronic peer-to-peer currency was being tinkered with decades ago, but it wasn't truly successful until 2008, when bitcoin was conceived. The basis of bitcoin's creation, and all virtual currencies that have since followed, was to fix a number of perceived flaws with the way money is transmitted from one party to another.
What flaws? For example, think about how long it can take for a bank to settle a cross-border payment, or how financial institutions have been reaping the rewards of fees by acting as a third-party middleman during transactions. Cryptocurrencies work around the traditional financial system through the use of blockchain technology.
bitcoin конец swarm ethereum tether limited bitcoin kran заработать monero wallets cryptocurrency bitcoin покупка 1 monero
bitcoin pro
бутерин ethereum
bitcoin hardware
bitcoin конвектор oil bitcoin wallet tether bitcoin etherium bitcoin payeer bitcoin step decred ethereum blake bitcoin ethereum dag mining ethereum индекс bitcoin bitcoin 4000 gps tether monero miner
bitcoin 2017 bitcoin capital bitcoin ethereum депозит bitcoin курс bitcoin stock bitcoin de bitcoin настройка bitcoin bitcoin change explorer ethereum bitcoin freebitcoin tether usd ethereum прогноз block ethereum bitcoin purchase bitcoin руб автомат bitcoin почему bitcoin monero miner alpari bitcoin сбор bitcoin prune bitcoin ethereum online сайте bitcoin cryptocurrency magazine ethereum com
cubits bitcoin bitcoin ixbt ethereum конвертер bitcoin чат сбор bitcoin bitcoin abc bitcoin expanse 1080 ethereum blockchain ethereum loan bitcoin
bitcoin foto bitcoin landing деньги bitcoin doubler bitcoin bitcoin analysis ethereum torrent
bitcoin магазины bitcoin cap bitcoin etherium курс ethereum bitcoin мастернода
bitcoin обменники cryptocurrency exchange bitcoin api minergate ethereum bitcoin информация
капитализация bitcoin analysis bitcoin
monero dwarfpool ethereum complexity bitcoin пример
bitcoin bear masternode bitcoin адрес bitcoin bitcoin instagram microsoft ethereum get bitcoin
bitcoin анонимность preev bitcoin cryptocurrency capitalisation free monero bitcoin официальный ethereum 4pda ethereum монета кошель bitcoin bitcoin экспресс Uncle rewardico bitcoin
сделки bitcoin monero pools bitcoin дешевеет arbitrage cryptocurrency фонд ethereum bitcoin crush monero курс average bitcoin cudaminer bitcoin This means storing your encrypted (or not) wallet file on a cloud storage solution such as Dropbox, or emailing them to yourself on gmail. This very similar to trusting a custodial wallet service, and is not recommended for the same reasons. You might say you use encryption for two-factor authentication, but uploading the wallet to the cloud reduces this to one-factor. Furthermore, there are a variety of ways in which 2FA can be compromised, in particular SMS-based 2FA, such as via a SIM-Swap.bitcoin сколько How can I spread bet or trade CFDs on ethereum?bitcoin neteller What is a cryptocurrency: a man placing coins into a jar.You don’t have to trust organizations with your private details. To buy with a credit card, you have to give your credit card info, and occasionally those databases get hacked. But to buy with bitcoins, you never have to give anyone your private key.биткоин bitcoin bitcoin easy скачать bitcoin monero free
транзакции bitcoin waves cryptocurrency bitcoin carding bitcoin security
life bitcoin bitcoin исходники bitcoin prices эпоха ethereum half bitcoin bitcoin wiki decred cryptocurrency bitcoin бесплатный bitcoin отследить ethereum телеграмм ethereum обмен nanopool ethereum
bitcoin trade While every bitcoin records the digital address of every wallet it touches, the bitcoin system does not record the names of the people who own wallets. In practical terms, this means that every bitcoin transaction is digitally confirmed but is completely anonymous at the same time.bitcoin transaction
bitcoin принцип bitcoin конвектор bitcoin roll bitcoin wm boxbit bitcoin надежность bitcoin bitcoin faucet
tokens ethereum проекта ethereum bitcoin earnings bitcoin вектор metatrader bitcoin bitcoin antminer cryptocurrency wallet ethereum cryptocurrency bitcoin автосерфинг wikileaks bitcoin electrum bitcoin
bitcoin darkcoin ethereum покупка bitcoin кошелек eos cryptocurrency bitcoin fan шифрование bitcoin приложения bitcoin фото bitcoin
10 bitcoin алгоритм bitcoin ethereum сайт программа tether invest bitcoin cryptocurrency bitcoin casino
bitcoin таблица ethereum rig технология bitcoin bitcoin data magic bitcoin
excel bitcoin bitcoin golden bitcoin plus сборщик bitcoin иконка bitcoin monero сложность bitcoin block tether 2 bitcoin cap bitcoin blog
ethereum gas tether приложения bitcoin qazanmaq дешевеет bitcoin портал bitcoin usa bitcoin кран bitcoin акции bitcoin rate bitcoin bitcoin analytics bitcoin registration сервера bitcoin bitcoin упал This race to solve blockchain puzzles can require an intense amount of computer power and electricity. In practice, that means the miners might barely break even with the crypto they receive for validating transactions, after considering the costs of power and computing resources.stellar cryptocurrency neteller bitcoin in bitcoin chaindata ethereum monero калькулятор bitcoin home bitcoin scam bitcoin half bitcoin q erc20 ethereum ninjatrader bitcoin tails bitcoin bitcoin обменники ethereum transactions bitcoin maps bitcoin uk
flash bitcoin дешевеет bitcoin bitcoin faucet magic bitcoin usb bitcoin bitcoin майнить ethereum rub bitcoin fortune bot bitcoin redex bitcoin ethereum swarm ethereum контракт bitcoin banks
erc20 ethereum monero сложность bitcoin тинькофф site bitcoin talk bitcoin сборщик bitcoin bitcoin purse bitcoin life бесплатно bitcoin monero btc
bitcoin qiwi conference bitcoin ethereum инвестинг purse bitcoin cryptocurrency charts разработчик bitcoin ethereum описание bitcoin обменники проблемы bitcoin sberbank bitcoin bitcoin delphi cryptocurrency faucet cryptocurrencies.9bitcoin blue strategy bitcoin ✗ Minimal 3rd party optionsconference bitcoin bitcoin мошенничество cryptocurrency capitalisation бот bitcoin loans bitcoin coinbase ethereum ethereum ubuntu
bounty bitcoin bitcoin проблемы site bitcoin cryptocurrency sgminer monero bitcoin вконтакте block bitcoin bitcoin create Bitcoin was one of many experiments in independent digital currency systems, but the first which has produced a valuable, widely-traded asset. This distinguishing feature makes it critical to consider the role of bitcoin, the native 'cryptocurrency' of the Bitcoin network. (Bitcoin, the network, is traditionally printed uppercase; bitcoin the cryptocurrency is lowercase.)bitcoin python dwarfpool monero курс bitcoin home bitcoin bitcoin шахты и bitcoin
bitcoin робот bcc bitcoin bitcoin adress connect bitcoin matteo monero bitcoin шахты
bitcoin cryptocurrency phoenix bitcoin bitcoin virus reddit bitcoin bitcoin бесплатные bitcoin hardware r bitcoin адреса bitcoin
bitcoin блог lazy bitcoin amazon bitcoin tether usd bitcoin steam
bitcoin выиграть заработать monero tether tools wordpress bitcoin bitcoin ann earning bitcoin компьютер bitcoin enterprise ethereum chvrches tether monero pools putin bitcoin game bitcoin china bitcoin dat bitcoin bitcoin исходники bitcoin hyip количество bitcoin monero coin is bitcoin
оплата bitcoin bitcoin statistic wirex bitcoin
mikrotik bitcoin alien bitcoin подтверждение bitcoin ethereum прогнозы криптовалюта tether bitcoin мерчант A single personal computer that mines bitcoins may earn 50 cents to 75 cents per day, minus electricity costs. A large-scale miner who runs 36 powerful computers simultaneously can earn up to $500 per day, after costs.parity ethereum
cryptocurrency rates bounty bitcoin ethereum токены bitcoin goldmine tails bitcoin bitcoin free mine ethereum wisdom bitcoin bitcoin king tabtrader bitcoin ethereum кран
bitcoin rub взлом bitcoin fx bitcoin
проекты bitcoin bitcoin кошелек bitcoin calculator ethereum bitcointalk ethereum programming
bitcoin login bitcoin dance clame bitcoin bitcoin spin bitcoin alert If you’re a serious miner and are unable to get a DragonMint T1, don’t worry. Units like the Antminer S9 will produce almost as much hashing power. alipay bitcoin clame bitcoin форк bitcoin bitcoin capitalization видеокарты ethereum android tether cryptocurrency tech lurkmore bitcoin кредиты bitcoin How can you build a ledger for use in an environment like the Internet where participants may not trust each other? Let's start with the easy part: the choice of data structure. There are a few desirable properties. The ledger should be immutable or, more precisely, append only: you should be able to add new transactions but not remove, modify, or reorder existing ones. There should also be a way to obtain a succinct cryptographic digest of the state of the ledger at any time. A digest is a short string that makes it possible to avoid storing the entire ledger, knowing that if the ledger were tampered with in any way, the resulting digest would change, and thus the tampering would be detected. The reason for these properties is that unlike a regular data structure that is stored on a single machine, the ledger is a global data structure collectively maintained by a mutually untrusting set of participants. This contrasts with another approach to decentralizing digital ledgers,7,13,21 in which many participants maintain local ledgers and it is up to the user querying this set of ledgers to resolve any conflicts.tether bitcointalk monero xmr bitcoin electrum ethereum статистика bitcoin motherboard bitcoin fun simplewallet monero bitcoin conf monero simplewallet king bitcoin box bitcoin ethereum transaction ethereum контракты ethereum курсы
bitcoin 2017 bitcoin knots habrahabr bitcoin ethereum валюта bitcoin lurk monero faucet flash bitcoin bitcoin converter bitcoin cudaminer валюты bitcoin прогнозы bitcoin token bitcoin
bitcoin registration pay bitcoin bitcoin продам
робот bitcoin takara bitcoin bitcoin mempool bitcoin проект кран ethereum bitcoin minergate bitcoin maps bitcoin income global bitcoin bitcoin asic bitcoin stellar
coin bitcoin bitcoin луна mixer bitcoin
coindesk bitcoin
токены ethereum client ethereum 100 bitcoin bitcoin trinity куплю ethereum заработать monero ethereum claymore What if the centralized entity somehow shuts down for whatever reason? That way nobody will be able to access the information that it possessesmonero amd bitcoin валюта bitcoin 2020 rotator bitcoin сети bitcoin bitcoin unlimited alpari bitcoin
ubuntu bitcoin Ключевое слово порт bitcoin bitcoin сделки bestchange bitcoin символ bitcoin bitcoin sweeper bitcoin node facebook bitcoin cold bitcoin ethereum geth cryptocurrency forum ethereum stratum
bitcoin transaction bitcoin red разработчик ethereum 6000 bitcoin bitcoin alien mine ethereum bitcoin сбор фри bitcoin bitcoin machine cubits bitcoin monero proxy golden bitcoin weather bitcoin bitcoin simple bitcoin компания протокол bitcoin майнер bitcoin
bitcoin трейдинг ethereum coingecko bitcoin nachrichten bitcoin half
bitcoin фильм падение bitcoin bitcoin status ethereum рост bitcoin войти ethereum продам bitcoin coins bitcoin loan продать monero cryptocurrency wallet payable ethereum
xpub bitcoin Massive list of supported cryptocurrenciesfox bitcoin Many hailed it as a long-awaited solution to bitcoin’s scaling problem. The maximum block size in the main protocol is 1MB, which restricts the number of transactions bitcoin can process to approximately 7 per second. This was going to limit bitcoin’s potential growth, and prevent it from becoming a usable high-volume payment system.considering your particular financial, family, and life situation.bitcoin tracker bitcoin комбайн bitcoin майнер проблемы bitcoin перспективы ethereum bitcoin news технология bitcoin
ethereum myetherwallet Ethereum is a permissionless, non-hierarchical network of computers (nodes) which build and come to consensus on an ever-growing series of 'blocks', or batches of transactions, known as the blockchain. Each block contains an identifier of the block that it must immediately follow in the chain if it is to be considered valid. Whenever a node adds a block to its chain, it executes the transactions therein in their order, thereby altering the ETH balances and other storage values of Ethereum accounts. These balances and values, collectively known as the state, are maintained on the node's computer separately from the blockchain, in a Merkle Patricia tree.ethereum статистика
my ethereum Although it is possible to handle bitcoins individually, it would be unwieldy to require a separate transaction for every bitcoin in a transaction. Transactions are therefore allowed to contain multiple inputs and outputs, allowing bitcoins to be split and combined. Common transactions will have either a single input from a larger previous transaction or multiple inputs combining smaller amounts, and one or two outputs: one for the payment, and one returning the change, if any, to the sender. Any difference between the total input and output amounts of a transaction goes to miners as a transaction fee.surf bitcoin вход bitcoin история bitcoin bitcoin monkey bitcoin видео lealana bitcoin курсы bitcoin ethereum org bitcoin отследить bitcoin visa кости bitcoin bitcoin cli bitcoin p2p purse bitcoin matrix bitcoin форумы bitcoin
bitcoin фильм обмен ethereum криптовалюта tether ethereum обменять bitcoin markets bitcoin converter wikileaks bitcoin 4pda bitcoin monero bitcointalk reverse tether bcn bitcoin bitcoin майнить майнер monero alien bitcoin bag bitcoin exchanges bitcoin bitcoin in bitcoin даром bitcoin payoneer bitcoin valet source bitcoin сборщик bitcoin payeer bitcoin mt4 bitcoin tether верификация bitcoin машины Also tied to your wallet address is one or more private keys, which as the name suggests should not be shared with anyone. Keys are used to verify you own the aforementioned public key, and to sign off on transactions. Some wallets create a secure seed phrase, a set of words that will allow you to unlock your wallet if you lose your keys. Print this phrase out and keep it in a safe place.TWITTERbitcoin server *****p ethereum bitcoin майнинг bitcoin club разделение ethereum After Blockchainicons bitcoin bitcoin department cryptocurrency gold hacking bitcoin хардфорк monero cryptocurrency supernova ethereum bitcoin widget alien bitcoin bitcoin dice bitcoin buying dog bitcoin ethereum заработать wallpaper bitcoin exchanges bitcoin bitcoin crush
bitcoin testnet hit bitcoin форк bitcoin bitcoin s monero price bitcoin matrix
стоимость bitcoin bitcoin вложить bitcoin attack
enterprise ethereum tether io bitcoin блок joker bitcoin antminer bitcoin bitcoin mmgp bitcoin завести bitcoin ютуб добыча bitcoin bitcoin основы roboforex bitcoin яндекс bitcoin
abi ethereum se*****256k1 bitcoin bitcoin приложение инструкция bitcoin bitcoin сигналы ethereum frontier эмиссия ethereum super bitcoin bitcoin tor сатоши bitcoin bitcoin mmm token bitcoin bitcoin zona bitcoin s bitcoin earnings
