It was 2008 when the mysterious Satoshi Nakamoto, a Japanese with an unknown identity, invented the first cryptocurrency in the world: bitcoin. An idea that, in the space of a few years, had a resounding and global success. Just ten years later, the digital currency market reached $ 110 billion – a value comparable to the gross domestic product of a nation like Morocco.
The meaning of the word cryptocurrency
Today there are thousands of cryptocurrencies. What is the meaning of this word? Cryptocurrency is the Italian translation of the English term cryptocurrency, which in turn derives from cryptography (cryptography) and currency (currency).
List of the most popular cryptocurrencies in the world, from bitcoin to ethereum
In addition to bitcoin, the list of the most popular cryptocurrencies includes the ethereum, the tether, the binance coin or even the dogecoin and the blockster. These are payment instruments based not on control by a state, that is, a central bank that watches over the fluctuations and physically prints the banknotes, but on cryptography. The latter, in fact, allows a network of people to “join forces” to generate money and circulate it. But it is unable to curb unbridled speculations, which generate gigantic (and often sudden) ups and downs in the value of the cryptocurrencies themselves.
What is the blockchain and how it works
Bitcoin was invented to carry out this same type of transaction without needing the intermediation of banks. The latter’s databases are replaced by a ledger: a record of all transactions, continuously updated by a network of tens of thousands of computers around the world. Problem: Banks are not limited to providing the service, but are also vigilant in order to avoid scams. Who takes care of it in the case of cryptocurrencies? To ensure the traceability and security of transactions, digital currencies rely on a technology called blockchain.
The literal translation is “block chains”. It is, in fact, the ledger (register) shared by all those who contribute to generate cryptocurrencies (the so-called mining) and to manage their transactions. Immense computing capacity is required to ensure the functioning of blockchains. Hundreds of thousands of computers need to be networked for this. And for this the so-called bitcoin & co “factories” were born. Whose energy consumption has literally exploded over the past few years.
These are places, mainly warehouses or even hangars, where thousands of servers work together, stacked on top of each other, day and night, 24 hours a day, non-stop. The question will be asked: why this mining rush? Because cryptography is like an enigma to which, through calculations, the solution can be found. And whoever does it first gets a reward in the blockchain system (paid, of course, in cryptocurrency).
What is mining, the “creation” of cryptocurrencies
The French business newspaper Les Echos visited a bitcoin factory in China and explained the system in a particularly effective way: “ Computers have the goal of solving cryptographic problems. It’s a bit like trying out billions of combinations in a safe. The miner who succeeds in this in the shortest possible time unlocks the lock “. To better understand the process, one can imagine that a miner is a person who plays craps in casino. A dice with a thousand faces: you are not, a thousand. To win, he has to roll less than 10, so his chances of winning on the first try are very low. For this he rolls the dice as quickly as possible and, despite this, it will take him a long time to succeed.
But if many people roll the dice, many “miners”, the duration of a single game becomes shorter because it is statistically more likely to hit the goal of letting out a number less than 10. And when it happens all the other players check that it is true: this is how the system guarantees its reliability even in the absence of a central controller. The winner takes the prize and another round, another game, can begin.
As a writer, Richard is an advocate of blockchain technology and cryptocurrency in general. He writes about all things from cryptography to economics, with a focus on how it applies to cryptocurrencies. He is also passionate about writing about topics such as decentralization, open-sourced software development, and copyright law.