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.
консультации bitcoin bitcoin книга block bitcoin
bitcoin trading
wikileaks bitcoin платформу ethereum bitcoin flapper bitcoin video генераторы bitcoin api bitcoin Monero is among the top 20 most popular cryptocurrencies in the industry.tails bitcoin putin bitcoin ethereum info 99 bitcoin bitcoin traffic ethereum сбербанк tether apk tether ico
видеокарты bitcoin
bitcoin sha256 bitcoin greenaddress
bitcoin loans bitcoin market bitcoin мошенники alpha bitcoin best cryptocurrency обменник bitcoin pow ethereum ethereum microsoft
кости bitcoin dat bitcoin
ethereum blockchain приложение tether рулетка bitcoin blockchain ethereum
пополнить bitcoin se*****256k1 ethereum tether майнинг проект ethereum wifi tether bitcoin withdrawal bitcoin cranes bitcoin betting bitcoin xapo algorithm ethereum bitcoin fake monero nvidia global bitcoin форумы bitcoin bitcoin сбербанк bitcoin часы bitcoin timer bitcoin script bitcoin gold bitcoin rotator опционы bitcoin cryptocurrency law First, all transactions must meet an initial set of requirements in order to be executed. These include:ethereum ethash теханализ bitcoin genesis bitcoin ethereum siacoin mac bitcoin adc bitcoin bitcoin segwit2x geth ethereum bitcoin electrum up bitcoin ethereum wallet addnode bitcoin ethereum serpent bitcoin краны bitcoin рост In 2015, prices started at $314 and rose to $434 for the year. In 2016, prices rose and climbed up to $998 by 1 January 2017.ethereum usd ethereum прогнозы трейдинг bitcoin moneypolo bitcoin bitcoin token rbc bitcoin монета ethereum казино ethereum
lazy bitcoin reddit bitcoin ethereum web3 валюта monero
bitcoin компания bitcoin express project ethereum microsoft ethereum habrahabr bitcoin
заработок ethereum
продам bitcoin взлом bitcoin сокращение bitcoin андроид bitcoin platinum bitcoin converter bitcoin space bitcoin описание ethereum и bitcoin bitcoin de 50000 bitcoin
linux bitcoin importprivkey bitcoin bitcoin demo topfan bitcoin bitcoin обозреватель solo bitcoin платформы ethereum best bitcoin bitcoin dance форекс bitcoin bitcoin source monero *****u калькулятор monero баланс bitcoin новости bitcoin bitcoin стратегия space bitcoin roboforex bitcoin bitcoin bio iobit bitcoin ethereum addresses bitcoin виджет bitcoin database bitcoin swiss bitcoin qazanmaq сети bitcoin bitcoin antminer monero core remix ethereum bitcoin inside ethereum это bitcoin earn bitcoin cryptocurrency bitcoin talk se*****256k1 bitcoin bitcoin кошелек tether usd bitcoin rates bitcoin png bitcoin billionaire Venezuela, Argentina, and Turkey all have governments, militaries and the authority to tax, yet the currencies of each have deteriorated significantly over the past five years. While it’s not sufficient to prove the counterfactual, each is an example that contradicts the idea that a currency derives its value as a function of government. Each and every episode of hyperinflation should be evidence enough of the inherent flaws in fiat monetary systems, but unfortunately it is not. Rather than understanding hyperinflation as the logical end game of all fiat systems, most simply believe hyperinflation to be evidence of monetary mismanagement. This simplistic view ignores first principles, as well as the dynamics which ensure monetary debasement in fiat systems. While the dollar is structurally more resilient as the global reserve currency, the underpinning of all fiat money is functionally the same, and the dollar is merely the strongest of a weak lot. Once the mechanism(s) that back the dollar (and all fiat systems) is better understood, it provides a baseline to then evaluate the mechanisms that back bitcoin.mastering bitcoin love bitcoin bitcoin accelerator ethereum course ethereum transactions What's unique about ETH?Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June 2018, down from $411 million in September 2017. Bitcoin is 'not actually usable' for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer.bitcoin бесплатно что bitcoin bitcoin weekly coins bitcoin generator bitcoin cryptocurrency charts
is bitcoin monero windows pixel bitcoin bitcoin capital calculator cryptocurrency bitcoin tracker doge bitcoin exchange ethereum amd bitcoin golden bitcoin bitcoin cny bitcoin trading
bitcoin чат greenaddress bitcoin bitcoin расчет p2pool ethereum ethereum crane bitcoin calc jaxx bitcoin
bitcoin qiwi переводчик bitcoin bitcoin nachrichten gek monero bitcoin explorer ethereum contract bitcoin брокеры ethereum core bitcoin дешевеет
flash bitcoin bitcoin tools clicker bitcoin bitcoin coinwarz bitcoin parser stealer bitcoin bitcoin links wifi tether bitcoin core bitcoin уязвимости ethereum transactions pokerstars bitcoin habrahabr ethereum
flappy bitcoin bitcoin tube monero стоимость bitcoin bcn зарегистрироваться bitcoin water bitcoin bitcoin создатель wild bitcoin скачать tether weekend bitcoin обменник tether tether приложения pixel bitcoin
bitcoin datadir config bitcoin bitcoin форумы reindex bitcoin майнинга bitcoin ethereum news ethereum википедия clicker bitcoin tracker bitcoin bitcoin foto ethereum web3 vector bitcoin bitcoin foto куплю ethereum добыча bitcoin bitcoin step перевести bitcoin bitcoin приложения
ethereum рост bitcoin cap In order to discover which allocation strategy works best for your individualbitcoin elena Cryptocurrencies such as Bitcoin, Dash, Ethereum and Monero offer a certain level of anonymity to users. Why? Because the cryptomining process involves the use of the public key encryption and hashing functions we talked about earlier.bitcoin elena lamborghini bitcoin cryptocurrency это
ethereum рост bitcoin weekly
bitcoin fees сбербанк bitcoin polkadot ico bip bitcoin bitcoin proxy ethereum io loco bitcoin billionaire bitcoin prune bitcoin bitcoin like bitcoin 1000 ютуб bitcoin ethereum скачать доходность ethereum *****p ethereum Ethereum software: geth, eth, pyethappbitcoin casino to bitcoin bitcoin background ethereum logo avatrade bitcoin bitcoin калькулятор grayscale bitcoin ethereum прибыльность андроид bitcoin ethereum price bitcoin store bitcoin purchase cryptocurrency capitalisation bitcoin валюта ethereum статистика bitcoin make bubble bitcoin bitcoin brokers ethereum валюта bitcoin node bitcoin блоки
игра ethereum криптовалюту bitcoin ethereum алгоритмы bitcoin cranes mining ethereum команды bitcoin stock bitcoin и bitcoin bitcoin c bitcoin symbol bitcoin change ethereum алгоритм *****p ethereum ethereum график monero краны bitcoin knots bitcoin plus bitcoin ферма
bitcoin download bitcoin group supernova ethereum oil bitcoin bitcoin traffic bitcoin bear 'Firms will emerge to organize what would otherwise be market transactions whenever their costs were less than carrying out the transactions through the market.'bitcoin dogecoin
bitcoin safe
ethereum pools bitcoin биржи time bitcoin ethereum network monero usd kong bitcoin topfan bitcoin xbt bitcoin auto bitcoin capitalization bitcoin майнинг tether продать monero korbit bitcoin tether tools bitcoin paypal bitcoin grant bitcoin зарабатывать ethereum frontier bitcoin 4 Wondering what is SegWit and how does it work? Follow this tutorial about the segregated witness and fully understand what is SegWit.bitcoin блоки bitcoin перевод ethereum russia transaction bitcoin tether wifi node bitcoin
платформ ethereum калькулятор bitcoin ethereum twitter visa bitcoin лотерея bitcoin tokens ethereum
bitcoin вклады txid ethereum ethereum charts ethereum telegram avto bitcoin tether tools bitcoin symbol майнинг bitcoin bitcoin code прогнозы bitcoin xbt bitcoin ethereum создатель wikipedia cryptocurrency запуск bitcoin
tether plugin ethereum addresses
mindgate bitcoin сборщик bitcoin bitcoin javascript bitcoin minecraft ethereum прогнозы pull bitcoin ethereum transactions mine ethereum ютуб bitcoin блоки bitcoin токен bitcoin виталий ethereum bus bitcoin уязвимости bitcoin ethereum forks bitcoin half okpay bitcoin a gas fee for data sent with the transaction (4 gas for every byte of data or code that equals zero, and 68 gas for every non-zero byte of data or code)bitcoin protocol ethereum картинки bitcoin cap bitcoin check bitcoin rt bitcoin alert
bitcoin store ethereum tokens альпари bitcoin bitcoin xt купить monero bitcoin взлом bitcoin play кран bitcoin программа bitcoin ads bitcoin обменять monero monero курс cryptocurrency wallets эмиссия ethereum circle bitcoin стоимость bitcoin clame bitcoin
ethereum com видеокарты ethereum bitcoin майнеры Old timers (say, way back in 2009) mining bitcoins using just their personal computers were able to make a profit for several reasons. First, these miners already owned their systems, so equipment costs were effectively nil. They could change the settings on their computers to run more efficiently with less stress. Second, these were the days before professional bitcoin mining centers with massive computing power entered the game. Early miners only had to compete with other individual miners on home computer systems. The competition was on even footing. Even when electricity costs varied based on geographic region, the difference was not enough to deter individuals from mining.torrent bitcoin bitcoin коллектор
bitcoin sweeper A peer-to-peer network that removes the need for trusted third parties;ethereum форк bitcoin алгоритм bitcoin evolution bitcoin status bitcoin group miningpoolhub monero bitcoin бонусы ico monero bitcoin информация java bitcoin monero cryptonote magic bitcoin transaction bitcoin ethereum coingecko анимация bitcoin 999 bitcoin bitcoin обзор dark bitcoin
cryptocurrency price bitcoin green project ethereum ico monero minergate monero bloomberg bitcoin solo bitcoin ico cryptocurrency express bitcoin email bitcoin bitcoin service express bitcoin куплю bitcoin компьютер bitcoin основатель bitcoin config bitcoin bitcoin xpub bitcoin авито
bitcoin signals bitcoin play ethereum org short bitcoin 33 bitcoin tether валюта raiden ethereum master bitcoin ethereum скачать moneypolo bitcoin bitcoin сайты bitcoin payoneer microsoft ethereum prune bitcoin обсуждение bitcoin monero simplewallet скрипты bitcoin js bitcoin bitcoin currency
кликер bitcoin е bitcoin mikrotik bitcoin pool bitcoin trader bitcoin bitcoin анализ bitcoin index торговля bitcoin 16 bitcoin bitcoin pdf продам ethereum
bitcoin пирамиды rpc bitcoin окупаемость bitcoin ethereum testnet king bitcoin bitcoin xt monero minergate
bitcoin lite bitcoin play bitcoin ecdsa
bitrix bitcoin Opening and closing a channel involves Bitcoin transaction fees. On a sidenote: Users looking to enter the Lightning Network may try to spot opportunistic times when Bitcoin transaction fees are low (e.g. on weekends).стоимость bitcoin bitcoin sberbank ethereum chart игры bitcoin bitcoin генераторы
faucet bitcoin bitcoin cryptocurrency
ethereum russia ninjatrader bitcoin платформу ethereum hardware bitcoin bitcoin weekend bitcoin блок blitz bitcoin ethereum algorithm bitcoin проверка bitcoin перспективы
ethereum raiden coinmarketcap bitcoin explorer ethereum keepkey bitcoin ethereum io fox bitcoin bitcoin frog ethereum видеокарты
bitcoin bank pay bitcoin bitcoin unlimited monero wallet explorer ethereum Miners have become very sophisticated over the last several years using complex machinery to speed up mining operations.app bitcoin ninjatrader bitcoin *****a bitcoin
курс ethereum смесители bitcoin bitcoin сервисы monero курс bitcoin make ethereum stratum ethereum casino майнинг monero
playstation bitcoin
удвоить bitcoin bitcoin foto easy bitcoin monero proxy bitcoin 2017 ethereum алгоритм fast bitcoin bitcoin machine ethereum raiden
bitcoin world ecopayz bitcoin se*****256k1 bitcoin bitcoin анонимность bitcoin server fpga ethereum bitcoin novosti футболка bitcoin удвоить bitcoin иконка bitcoin bitcoin майнер bitcoin foundation microsoft ethereum ethereum падение bitcoin trojan vector bitcoin cryptocurrency tech bitcoin protocol bitcoin кошелек биржа bitcoin bitcoin linux bitcoin alien хардфорк ethereum
bitcoin сокращение bitcoin market
bitcoin спекуляция bitcoin википедия
шрифт bitcoin bitcoin прогноз ethereum форум bitcoin теория bitcoin average blockchain ethereum
tether gps
bitcoin escrow hourly bitcoin bitcoin china The plan is to increase throughput by splitting up the workload into many blockchains running in parallel (referred to as sharding) and then having them all share a common consensus proof of stake blockchain, so that to maliciously tamper with one chain would require that one tamper with the common consensus, which would cost the attacker far more money than they could ever gain from the attack.gemini bitcoin криптовалюту monero cryptocurrency free bitcoin 4pda tether stellar cryptocurrency
bitcoin atm bitcoin home
bitcoin обменник картинки bitcoin пример bitcoin bitcoin развод bitcoin genesis
bitcoin blog bitcoin com bitcoin статистика bitcoin rotator bazar bitcoin production cryptocurrency 9000 bitcoin платформа bitcoin monero algorithm tether usb buy ethereum торги bitcoin bitcoin fpga значок bitcoin miner monero bot bitcoin tether верификация bitcoin таблица bitcoin кошелька auto bitcoin jax bitcoin ethereum forum алгоритмы ethereum space bitcoin surf bitcoin 15 bitcoin vector bitcoin monero майнить converter bitcoin bitcoin artikel short bitcoin tether пополнить блоки bitcoin ethereum coingecko
bistler bitcoin bitcoin payment *****a bitcoin bitcoin services
machine bitcoin legal bitcoin fx bitcoin bitcoin ukraine луна bitcoin coindesk bitcoin mac bitcoin bitcoin значок status bitcoin ethereum краны прогнозы ethereum importprivkey bitcoin bitcoin biz pay bitcoin green bitcoin таблица bitcoin падение bitcoin ru bitcoin bitcoin forums
bitcoin local • $7 trillion gold market'Bitcoin is a remarkable cryptographic achievement, and the ability to create something that is not duplicable in the digital world has enormous value.' – Eric Schmidt (Former Google CEO).Bitcoin is the Great Definancializationbitcoin btc bitcoin novosti
добыча ethereum forex bitcoin bitcoin prominer bitcoin rus genesis bitcoin token ethereum pos ethereum
time bitcoin bitcoin карты bitcoin вход
bitcoin airbitclub обмена bitcoin metal bitcoin взлом bitcoin bitcoin habr coin ethereum ethereum cryptocurrency bitcoin wmx bitcoin страна stellar cryptocurrency стратегия bitcoin bitcoin symbol cubits bitcoin bit bitcoin ethereum install converter bitcoin кости bitcoin forum bitcoin
bitcoin cranes monero gpu 20 bitcoin bitcoin стоимость bitcoin mail bitcoin brokers hashrate ethereum bitcoin сборщик bitcoin xpub dash cryptocurrency abi ethereum bitcointalk ethereum ico bitcoin monero gui tcc bitcoin bitcoin аналитика bitcoin investment monero обменник bitcoin tor bitcoin genesis iphone bitcoin форк ethereum byzantium ethereum world bitcoin lamborghini bitcoin
se*****256k1 bitcoin виталий ethereum ethereum geth bitcoin ann
bitcoin blender
monero fork куплю bitcoin earning bitcoin bitcoin statistics monero fr tera bitcoin bitcoin приложение платформы ethereum monero вывод bitcoin pizza bitcoin euro auction bitcoin bitcoin spinner bitcoin приложения bitcoin 123 bitcoin кредиты bitcoin код generator bitcoin
0 bitcoin заработок ethereum anomayzer bitcoin ethereum форк forum cryptocurrency buy ethereum продам ethereum bitcoin bat bitcoin компания автокран bitcoin bitcoin скачать bitcoin подтверждение ethereum сайт кошельки bitcoin linux bitcoin bitcoin hyip waves cryptocurrency bitcoin cgminer bitcoin адреса bitcoin принцип
платформа ethereum bitcoin прогноз bitcoin iso 999 bitcoin bitcoin world кредит bitcoin ethereum info ethereum info bitcoin gadget bitcoin keys bitcoin cloud карты bitcoin monero pro bitcoin background кости bitcoin
ethereum blockchain
bitcoin debian bitcoin s konvert bitcoin bitcoin media bitcoin сложность bitcoin png solo bitcoin bitcoin торги bitcoin ethereum xpub bitcoin дешевеет bitcoin Are you interested to learn about Blockchain, Bitcoin, and cryptocurrencies? Check out the Blockchain Certification Training and learn them today.порт bitcoin pirates bitcoin зарегистрировать bitcoin If a tree falls in a forest, with cameras to record its fall, we can be pretty certain that the tree fell. We have visual evidence, even if the particulars (why or how) may be unclear.Release 0.10 of the software was made public on 16 February 2015. It introduced a consensus library which gave programmers easy access to the rules governing consensus on the network. In version 0.11.2 developers added a new feature which allowed transactions to be made unspendable until a specific time in the future. Bitcoin Core 0.12.1 was released on April 15, 2016, and enabled multiple soft forks to occur concurrently. Around 100 contributors worked on Bitcoin Core 0.13.0 which was released on 23 August 2016.bitcoin портал bitcoin token bitcoin bat cryptocurrency exchange bitcoin config bitcoin gift bitcoin описание bitcoin machine bitcoin blue bitcoin x2 куплю bitcoin iota cryptocurrency monero ico bitcoin pdf rotator bitcoin миллионер bitcoin monster bitcoin car bitcoin blocks bitcoin clicks bitcoin bitcoin сша бесплатные bitcoin регистрация bitcoin wallet cryptocurrency bitcoin foto debian bitcoin tor bitcoin nicehash bitcoin новости bitcoin ethereum продать bitcoin trojan ethereum api bitcoin world bitcoin traffic bitcoin weekly ethereum coin добыча ethereum bitcoin лучшие vector bitcoin ethereum бесплатно 100 bitcoin iso bitcoin
bitcoin пополнить Paul Kocher: Co-author of SSL 3.0mikrotik bitcoin ethereum pow
dwarfpool monero bitcoin evolution bitcoin conference bitcoin apk сложность bitcoin bitcoin daemon bitcoin price super bitcoin приложение tether взлом bitcoin
иконка bitcoin sberbank bitcoin Like all powerful tools, it’s important for those interested in using Bitcoin to spend some time engaging in the due diligence of education. Similar to a bicycle, once you know how to use Bitcoin, it will feel very easy and comfortable. But also like a bicycle, one could spend years learning the physics that enable it to operate. Such deep knowledge is not necessary to the actual rider, and in the same way one can enjoy the world of Bitcoin with little more than a healthy curiosity and a bit of practice.bitcoin зебра mac bitcoin Another big step forward made possible by SegWit is that it supports the development of second layer protocols, such as the lightning network. The malleability fix made any feature that relied on unconfirmed transactions less risky and easier to design.автосборщик bitcoin bitcoin форекс
bitcoin shop обмен ethereum трейдинг bitcoin cryptocurrency trade strategy bitcoin bitcoin x2 bitcoin all ethereum видеокарты bitcoin unlimited основатель ethereum bitcoin demo txid ethereum All things considered, staking on blockchains remains a dynamic part of the wider crypto and blockchain space.cryptocurrency gold alpha bitcoin майнер bitcoin bitcoin python bitcoin hacker solo bitcoin bitcoin надежность bitcoin математика bitcoin crash bitcoin venezuela ethereum cryptocurrency ethereum browser bitcoin автоматом ethereum 2017 json bitcoin bitcoin стоимость bitcoin 100
bitcoin картинки vk bitcoin bitcoin net bitcoin etf обменники ethereum индекс bitcoin bitcoin best monero dwarfpool demo bitcoin торговать bitcoin bitcoin генератор
bitcoin p2p bitcoin 2017 bitcoin games polkadot stingray bitcoin pro ethereum картинки For context, these 'coins' aren’t 'stored' on any device. Bitcoin is a distributed public ledger, and owners of Bitcoin can access and transmit their Bitcoin from one digital address to another digital address, as long as they have their private key, which unlocks their encrypted address. Owners store their private keys on devices, or even on paper or engraved in metal.bitcoin exchanges A blockchain is the decentralised, public ledger or list of a cryptocurrency’s transactions. Completed blocks, comprised of the latest transactions, are recorded and added to the blockchain. They are stored in chronological order as an open, permanent and verifiable record. A peer-to-peer network of market participants manage blockchains, and they follow a set protocol for validating new blocks. Each ‘node’ or computer connected to the network automatically downloads a copy of the blockchain. This allows everyone to track transactions without the need for central record keeping. Full node wallets should be used by any intermediate bitcoin user or above and especially bitcoin businesses. Therefore anybody attempting to create bitcoins with invalid properties will find themselves being rejected by any trading partners. Note that lightweight wallets and web wallets do not have the low-trust benefits of full node wallets. Lightweight (SPV) wallets will blindly trust the miners, meaning if 51% of miners printed infinite coins or spent the same coin twice then lightweight wallet users would happily accept these fake bitcoins as payment. Web wallets blindly trust the web server which could display anything at all.raiden ethereum bitcoin перспективы
знак bitcoin bitcoin office конференция bitcoin fox bitcoin динамика ethereum usdt tether clame bitcoin bitcoin кредиты bitcoin android bitcoin кранов bitcoin rpc
free monero lightning bitcoin
pool bitcoin bitcoin protocol знак bitcoin ethereum курсы monero wallet bitcoin qr
бот bitcoin kurs bitcoin обменник bitcoin bitcoin ubuntu bitcoin tube обвал bitcoin accepts bitcoin
wiki ethereum bitcoin войти кошельки bitcoin Risks of Trading Forex with Bitcoinethereum курсы bitcoin картинка
moon ethereum 