FAQsFrom blockchains to mining
What is cryptocurrency?
“A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.”
Think of cryptocurrency like a stock or piece of cash. That cash/stock certificate is relative to you, and if you lose your wallet, you’ve lost your money. The same applies for cryptocurrency. It’s just a digital item that has a value attached to it.
What is a blockchain?
“A blockchain, originally block chain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data.”
The best way to think of a blockchain is like a physical book of accounts. Unlike a spreadsheet, once you write in a physical book you can’t remove that entry (no tipex, no ink erasers please), and this is like a blockchain. Every transaction on the blockchain cannot change or be deleted, only new ones can be added. This is why, over time, as a blockchain expands the time it takes a cryptocurrency transaction to complete gets longer.
What is mining?
“Mining is a record-keeping service done through the use of computer processing power. Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block.”
Think of mining like someone doing the accounts for you. So when you go to the shops and use your debit/credit card to pay for your goods, your bank/credit provider has infrastructre in place to verify your identity, check you have enough money in your account, and check that the transaction can be completed. Finally your bank/credit provider then transfers the price of that transaction to the shop. With cryptocurrencies there are no banks or credit providers, all this transaction computing is done by other people, this is what mining is. And in return for others giving you their computing power whenever you make a buy, sell, or trade, they get a share of the reward.
What is an alt-coin?
An alt-coin (or altcoin) is simply another cryptocurrency other than Bitcoin. Bitcoin was made in 2009 and since then hundreds of other coins have launched. Each coin may have a slightly different technology, hence the term alt (alternative).