Defined as a ‘digital asset’ or virtual currency that only exists online and used to represent a monetary value in transactions for the exchange of goods and services. In a world where debit and credit card contactless transactions are more and more popular, the idea of currency moving around in cyber space isn't all that hard to take in. The biggest difference is that cryptocurrency is decentralised and not regulated by a 3rd party i.e.. a bank.
To put it simply, Bitcoin is a type of virtual currency that can be transferred between parties in exchange for goods and services without a using a bank. Sounds a bit dodgy? Perhaps not. After emerging on the financial markets in 2013, Bitcoin's popularity grew quickly and one of the first of its kind. It’s a decentralised digital currency meaning it doesn’t have to be validated by financial institutions. Described as a type of cryptocurrency measured in units, it exists only online. Last year Bitcoin's value reached its all time high of $11,395 (£8,890). The boom for buying up stocks of Bitcoin seemed to rise quickly then hit it's peak but perhaps time will tell.
Seen as a turning point in technology, Blockchain is a list of records of computer code used to validate cryptocurrency. Or in simple language – a digital book keeping system that binds together lists of transactions in secure batches called ‘blocks’. Block chains are the protocol on which cryptocurrency is built upon. First developed in 2008, the Blocks refer to the change in a data base that chains/add to the next block when the next change is made making a long chain of blocks. Simple right?
So in the digital currency or cryptocurrency world, a blockchain is a publicly shared ledger of records similar to a book keeping system. It gets even more techie as each block is assigned a unique number known as a hash (not as in 'hash brown' the tasty potato thingy). These digital ‘chains’ exist across hundreds and thousands of computers and servers. This makes them difficult to hack unlike a bank which holds all it’s secure data on data bases on servers in one place.
In modern times this can be related to computer science and mathematical theory. Encryption is the primary area, which is a method of converting data for security purposes.
In what seemed to be a small boom in 2017, a new type of malware was bourne from the cryptopcurrency world where hackers and cyber criminals found a way of using web browsers to mine or harvest cryptocurrency such as Bitcoin. The attack starts when the web browser is first opened and doesn't necessarily need a program to be installed or ran on the victims computer. Using the computers processing power or CPU, it works away in the background without the unsuspecting victim even knowing.
Recently it was reported that over 4000 websites were hit by a crypto-mining attack which included a number of government websites. The Malware was spread by a browser add-on that infected the websites allowing hackers to potentially intercept the data on the websites. The website themselves belonging to NHS trusts and local councils, were not actually hacked but the whole thing was understandably deemed a major security breach.
Similar to Data mining, the process of using software to turn raw data into useful information - Web mining is a similar process but using web browsers usually without permission (linked to crypto jacking). Businesses use this method to search for patterns in large blocks of data to learn customer behaviours in the interest of marketing. In computer science terms, mining is about extracting information from data in order to use it for another purpose.
Initial Coin Offerings are a means of raising funds for cryptocurrency ventures. Start-up companies use ICO’s to get around the regulation and restriction attached to raising money through venture capitalists or banks. What ever happened to just keeping a piggy bank in the kitchen?
A percentage of the currency (or crypto currency in this case) is sold to the backers of the venture using legal tender or Bitcoin.
So what does it all amount to? Digital currency may well be a boom that has either already happened and we didn’t even notice or cryptocurrency might just be the game changing way we handle our funds in the future.
Cyber security is a growing concern already and cyber criminals won't need much encouragement to try and find a way of exploiting a way of grabbing virtual money. If our national currencies ended up being replaced by virtual currency, this would take the control away from Governments which isn’t likely to happen any time soon.
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All terminology in this post is also referenced in the blog's TECHNICAL GLOSSARY page.
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