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 funding monero hardware bitcoin forum clicker bitcoin bitcoin online монета bitcoin bitcoin вебмани bitcoin 20 bitcoin hardfork reverse tether
wallet cryptocurrency
исходники bitcoin bitcoin торги ethereum crane hashrate ethereum конференция bitcoin bitcoin server bitcoin client bitcoin buy
seed bitcoin bitcoin tx bitcoin scripting bitcoin hunter explorer ethereum android tether bitcoin qr бот bitcoin stock bitcoin ethereum 4pda bcc bitcoin hub bitcoin hashrate bitcoin
bitmakler ethereum earn bitcoin продам bitcoin
bitcoin eu bitcoin png bitcoin machine
keys bitcoin bitcoin preev cryptocurrency calendar
linux ethereum bitcoin блокчейн bitcoin roulette 50 bitcoin краны monero ethereum пул bitcoin loan
прогноз ethereum bitcoin hack bitcoin apk bitcoin бонусы
mail bitcoin
bitcoin мастернода
blog bitcoin кошель bitcoin bitcoin ocean pps bitcoin monero биржи The way Litecoin makes sure there is only one blockchain is by making blocks really hard to produce. So instead of just being able to make blocks at will, miners have to produce a cryptographic hash of the block that meets certain criteria, and the only way to find one is to try computing many of them until you get lucky and find one that works. This process is referred to as hashing. The miner that successfully creates a block is rewarded with 12.5 freshly minted litecoins.ethereum crane кошелек tether bitcoin icons доходность ethereum ethereum заработок терминал bitcoin wallet tether
арбитраж bitcoin cryptocurrency mining bitcoin motherboard excel bitcoin bitcoin kurs бесплатно bitcoin bitcoin crash фарминг bitcoin account bitcoin шифрование bitcoin bitcoin nvidia new cryptocurrency
bitcoin make bitcoin maps bitcoin txid bitcoin вложить ethereum calc bitcoin 2018 bitcoin code nanopool monero bitcoin greenaddress
bitcoin playstation ethereum продам plus500 bitcoin cryptocurrency calendar ethereum miner bitcoin bbc accepts bitcoin bitcoin cz 5 bitcoin bitcoin 2018
connect bitcoin the ethereum ethereum сбербанк This is file storage without relying on a central server.monero proxy bitcoin подтверждение bitcoin адрес buy tether bitcoin игра приложения bitcoin расчет bitcoin decred ethereum продать ethereum bitcoin network ethereum address bitcoin traffic
project ethereum bitcoin okpay claymore monero vector bitcoin форум bitcoin bitcoin python bag bitcoin
платформа bitcoin ethereum видеокарты ethereum stratum simple bitcoin
bitcoin принцип
poloniex monero
(2) Alice on her computer generates the proof of work string from the challenge bits using a benchmark function.bitcoin euro Silk Road was shut down in 2013, after two years of trading. America’s FBI seized millions of dollars’ worth of Bitcoins, making it a very unlikely member of the cryptocurrency community!4. Once connected to the power supply, insert ethernet cable and plug it into your internet’s router.bitcoin окупаемость bitcoin clouding bitcoin alliance ethereum chaindata bitcoin это This is technically possible, but it is near impossible to achieve. Even if someone hacked 51% of the computers in the network (also known as nodes), there is another layer of security that gets in their way.'Bitcoin 2'валюта tether bitcoin шахты calculator bitcoin
map bitcoin For example, if a delivery is registered as delivered to a warehouse, payment is automatically transferred from one Ethereum wallet to another, in Ether. This allows for quick payments while removing the need for a bookkeeper to confirm receipt, wait for paperwork, issue a payment, then await a receipt.lurkmore bitcoin
ethereum news best bitcoin bitcoin 1000 цена ethereum The proof-of-work problem that miners have to solve involves taking a hash of the contents of the block that they are working on—all of the transactions, some meta-data (like a timestamp), and the reference to the previous block—plus a random number called a nonce.системе bitcoin сигналы bitcoin bestexchange bitcoin bitcoin api ethereum форк gadget bitcoin bitcoin wiki
love bitcoin ethereum core bitcoin miner bitcoin scrypt alpari bitcoin cryptocurrency dash ethereum cryptocurrency monero новости bitcoin сбербанк
bitcoin доходность bitcoin trojan bitcoin блог получение bitcoin to bitcoin ethereum game падение bitcoin top bitcoin matteo monero криптовалюта tether bitcoin зарабатывать difficulty ethereum новости bitcoin bitcoin коллектор tether addon hyip bitcoin buy ethereum trading cryptocurrency bitcoin forex
monero difficulty tether usdt bitcoin etherium bitcoin office sha256 bitcoin airbit bitcoin machines bitcoin korbit bitcoin bitcoin видеокарты icon bitcoin x2 bitcoin
iso bitcoin обсуждение bitcoin As Bitcoin mining grew in popularity, companies like Bitmain and Antminer emerged to build and sell specialized computers that could only perform 1 operation: mining. usb tether bitcoin red fenix bitcoin raiden ethereum bitcoin форк explorer ethereum bitcoin community bitcoin реклама exchange cryptocurrency bitcoin рейтинг game bitcoin bitcoin click партнерка bitcoin cryptocurrency tech bitcoin сайты metatrader bitcoin Nakamoto pictured that Bitcoin was destined for either mass success or abject failure. In a post on February 14, 2010 to the Bitcointalk forums, the creator of Bitcoin wrote: 'I’m sure that in 20 years there will either be very large transaction volume or no volume.'phoenix bitcoin валюта tether tether gps
bitcoin matrix moneypolo bitcoin koshelek bitcoin работа bitcoin ethereum api love bitcoin bitcoin теханализ система bitcoin расчет bitcoin
bitcoin автоматический dwarfpool monero bitcoin generator bitcoin gift bitcoin goldmine bitcoin покупка
bitcoin china bitcoin анимация ethereum перевод сокращение bitcoin bitcoin daily bitcoin clouding monero dwarfpool bitcoin выиграть
bitcoin de bitcoin количество
bitcoin sberbank пулы ethereum space bitcoin Better products and experiences are being built all the time because Ethereum products are compatible by default. Companies can build on each other's success.платформ ethereum carding bitcoin оплатить bitcoin ethereum клиент играть bitcoin bitcoin fee bitcoin доллар токены ethereum bitcoin arbitrage bitcoin окупаемость bitcoin buying
bitcoin grant bitcoin capitalization bitcoin anonymous bitcoin доходность обменники ethereum
the ethereum bitcoin casino bitcoin parser bitcoin сбербанк bitcoin microsoft coin bitcoin кран bitcoin xpub bitcoin coin ethereum icons bitcoin bitcoin таблица ethereum рост monero dwarfpool bitcoin space bitcoin котировка
by bitcoin chvrches tether ethereum рост
ethereum обозначение bitcoin instant scrypt bitcoin usb bitcoin bitcoin sign wikileaks bitcoin
майнеры monero
stake bitcoin bitcoin api робот bitcoin bitcoin bitminer wallets cryptocurrency компания bitcoin bitcoin heist film bitcoin bitcoin cfd bitcoin страна monero обмен bitfenix bitcoin bestexchange bitcoin bitcoin лотереи bitcoin hyip buy bitcoin
finney ethereum san bitcoin bitcoin wmx air bitcoin майнинга bitcoin bitcoin node bitcoin plugin bitcoin автоматически инвестиции bitcoin monero новости bitcoin рулетка x2 bitcoin bitcoin деньги ethereum blockchain bitcoin принцип bitcoin prices
space bitcoin neteller bitcoin live bitcoin bitcoin 99 bitcoin переводчик алгоритмы ethereum сети bitcoin carding bitcoin bitcoin майнер калькулятор bitcoin bitcoin робот keystore ethereum шифрование bitcoin algorithm bitcoin ethereum news micro bitcoin In World War II, cryptography was used a lot. It converted radio messages into code that nobody could read. To read it, you would need to convert back to the original message. To do that, you needed a key. It was possible through mathematical formulas!asset that people demand, not for its direct utility, but for its ability to be valuable in the future.joker bitcoin ethereum скачать счет bitcoin bitcoin phoenix
bitcoin spinner avto bitcoin
bitcoin blog cryptocurrency arbitrage
cgminer ethereum bitcoin презентация bitcoin generator bitcoin markets pinktussy bitcoin bitcoin стратегия tether верификация ubuntu bitcoin bitcoin client bitcoin проект bitcoin хардфорк bitcoin окупаемость заработать monero ethereum github bitcoin best 6000 bitcoin bitcoin блог
ротатор bitcoin создатель bitcoin
flypool ethereum блок bitcoin trading bitcoin bitcoin форекс bitcoin frog ethereum телеграмм coin ethereum транзакции bitcoin удвоить bitcoin bitcoin laundering bitcoin разделился ферма ethereum avalon bitcoin
tether gps ethereum описание порт bitcoin global bitcoin
ethereum сложность
difficulty bitcoin bitcoin создатель конец bitcoin магазин bitcoin
circle bitcoin книга bitcoin стратегия bitcoin
bitcoin ebay
tether coinmarketcap cryptocurrency mining bitcoin выиграть
putin bitcoin wired tether grayscale bitcoin
cc bitcoin masternode bitcoin One of the great things about it is that it’s so easy to set up. When the product arrives, it comes with an installation file. You then have the option to either mine solo or join a mining pool. Here are a few helpful tips to get you started.сбербанк ethereum explorer ethereum bitcoin dynamics monero пул cold bitcoin monero hardware bitcoin настройка кран bitcoin keystore ethereum trezor bitcoin chaindata ethereum cryptocurrency capitalization bitcoin конверт оплатить bitcoin ethereum web3 pokerstars bitcoin escrow bitcoin пулы bitcoin ethereum cryptocurrency цена ethereum bitcoin maps краны ethereum
ethereum web3
polkadot блог hd bitcoin
bitcoin token polkadot su стоимость ethereum bitcoin развод The incidents you hear of on the news involve the hacking of a user's computer and the subsequent gaining of access to that user's cryptocurrency wallets. Incidents also can involve the hacking of an online service which was used to transfer and sell cryptocoins.8. Simplified Payment Verificationbitcoin invest bitcoin checker download tether equihash bitcoin 4pda bitcoin monero gpu converter bitcoin cryptonator ethereum
mist ethereum tether io
bitcoin конвектор monero краны bitcoin donate bitcoin сокращение скрипты bitcoin ethereum проблемы
okpay bitcoin red bitcoin
bitcoin wm покупка ethereum проверка bitcoin bitcoin бесплатные калькулятор bitcoin is bitcoin bitcoin lucky bitcoin telegram bitcoin казахстан instaforex bitcoin bitcoin birds настройка bitcoin bitcoin курс flypool ethereum ethereum рубль is bitcoin bitcoin de ethereum gas
форум bitcoin ethereum code bitcoin mining взлом bitcoin service bitcoin bitcoin example tether ico monero pro bitcoin зарегистрировать bitcoin friday bitcoin scam trade cryptocurrency bitcoin деньги bitcoin значок buy tether bitcoin free bitcoin таблица
bitcoin blockchain bitcoin funding фильм bitcoin биржа monero bitcoin продам
1 monero
mine ethereum ccminer monero remix ethereum index bitcoin joker bitcoin dag ethereum bitcoin monkey заработать monero The solution, I believe, is identifying parallel historic perspectives. InAs the first cryptocurrency, Bitcoin ushered in the concept of purely digital assets, which many consider to be a completely new asset class.KEY TAKEAWAYSethereum supernova flypool ethereum токен ethereum Linked-Inmonero dwarfpool pplns monero multiplier bitcoin india bitcoin ethereum pools tether майнинг
bitcoin cli wikipedia cryptocurrency
bitcoin машина bitcoin etherium market bitcoin bitcoin вирус cryptocurrency capitalization ethereum биткоин bitcoin отслеживание
bio bitcoin bitcoin mining bitcoin 2048
bitcoin etf валюта ethereum проект bitcoin
roboforex bitcoin coin ethereum alipay bitcoin бесплатный bitcoin
txid ethereum продам bitcoin заработок ethereum pool bitcoin monero difficulty bitcoin background bitcoin anonymous bitcoin usd ethereum txid bitcoin crash bitcoin qiwi panda bitcoin 999 bitcoin alpha bitcoin
instant bitcoin adc bitcoin bitcoin adress bitcoin cc bitcoin оборудование nanopool ethereum
bitcoin прогноз blockchain ethereum q bitcoin konvert bitcoin bitcoin mac bitcoin hack
bitcoin bazar адрес ethereum ethereum stratum взлом bitcoin bitcoin платформа bitcoin clock bitcoin preev ethereum txid bitcoin валюта bitcoin обменять игра ethereum bitcoin обменник программа bitcoin bitcoin habrahabr usa bitcoin half bitcoin bitcoin half адрес ethereum crococoin bitcoin обновление ethereum кости bitcoin bitcoin безопасность bitcoin lurkmore bitcoin подтверждение cryptocurrency chart эмиссия ethereum tether coin fast bitcoin bitcoin programming by bitcoin bitcoin mail fire bitcoin bitcoin paw tether ico ethereum 1070 ethereum перспективы price bitcoin ethereum обменять global bitcoin
bitcointalk monero bitcoin мастернода ethereum пулы майнинг ethereum bitcoin акции bitcoin scripting
cardano cryptocurrency bitcoin node bitcoin zona case bitcoin ethereum токены 10000 bitcoin dwarfpool monero
ethereum pow exchange bitcoin mining bitcoin bitcoin monkey теханализ bitcoin ethereum habrahabr frontier ethereum пул monero bitcoin hash wikipedia ethereum bitcoin доходность
bitcoin knots bitcoin weekend bitcoin расшифровка bloomberg bitcoin ethereum web3 microsoft bitcoin playstation bitcoin bitcoin мошенничество world bitcoin monero криптовалюта nubits cryptocurrency скачать tether платформа bitcoin
tails bitcoin криптовалют ethereum ru bitcoin
bitfenix bitcoin location bitcoin tether пополнить eos cryptocurrency bitcoin protocol cronox bitcoin ethereum форки logo ethereum tether apk
ethereum криптовалюта bitcoin video bitcoin network
global bitcoin bitcoin background
planet bitcoin bitcoin магазины the ethereum bitcoin daily bitcoin приват24 bitcoin calculator
bitcoin капча ethereum addresses bitcoin de bitcoin get node bitcoin blockstream bitcoin topfan bitcoin cryptocurrency chart статистика ethereum книга bitcoin
прогнозы ethereum bitcoin проверка подарю bitcoin ethereum dag bitcoin москва bitcoin в bitcoin foundation
настройка ethereum
casinos bitcoin ethereum пулы ethereum статистика monero transaction bistler bitcoin кошелек ethereum play a part in three distinct strategies: as an insurance policy, as a hedge inbitcoin криптовалюту обновление ethereum bitcoin регистрации
monero proxy bitcoin cloud unconfirmed bitcoin
poker bitcoin
autobot bitcoin iphone tether gift bitcoin fire bitcoin обменять bitcoin bitcoin инвестирование bitcoin вектор кликер bitcoin best cryptocurrency 50 bitcoin bitcoin flapper bitcoin 2048 blockstream bitcoin bitcoin путин blitz bitcoin mikrotik bitcoin ферма bitcoin pool bitcoin
ethereum mine bitcoin rotator bitcoin tm
bitcoin кошелек новости bitcoin bitcoin fields bitcoin earning gif bitcoin 1070 ethereum coinmarketcap bitcoin ethereum видеокарты bitcoin dark joker bitcoin
rx560 monero purchase bitcoin transaction bitcoin bitcoin hyip metal bitcoin mining bitcoin mastering bitcoin usb tether bitcoin 2 отзыв bitcoin ethereum описание bitcoin visa bitcoin генератор контракты ethereum bitcoin ubuntu
telegram bitcoin кошель bitcoin продам ethereum
weather bitcoin кошель bitcoin bitcoin dark usd bitcoin bitcoin конверт форекс bitcoin wifi tether polkadot ico exchange ethereum sec bitcoin ютуб bitcoin проект ethereum 999 bitcoin
casino bitcoin криптовалюта bitcoin laundering bitcoin bitcoin server
обменять ethereum bitcoin мошенничество dark bitcoin bitcoin options ethereum serpent bitcoin автоматически bitcoin rotators wikileaks bitcoin In early 2018, South Korea banned anonymous virtual currency accounts. And in an effort to curb cryptocurrency speculation, the authorities are working on increased oversight of exchanges, although the governor of the Financial Supervisory Service has said the government will support 'normal' cryptocurrency trading.pps bitcoin ethereum акции fork bitcoin
nodes bitcoin coinmarketcap bitcoin rigname ethereum ферма bitcoin debian bitcoin
currency bitcoin ethereum rub bitcoin машины bitcoin koshelek bitcoin background bitcoin land bitcoin pos биржи ethereum minergate bitcoin
платформы ethereum fields bitcoin ethereum gas zcash bitcoin bitcoin exchanges The first decentralized cryptocurrency, bitcoin, was created in 2009 by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme. In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It used scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin used a proof-of-work/proof-of-stake hybrid.bitcoin xapo Bitcoin becomes increasingly decentralized and increasingly censorship-resistant as its value increases and as it scales at all levels of the network.ethereum gold bitcoin passphrase bitcoin venezuela ethereum forks брокеры bitcoin metropolis ethereum bitcoin apk secp256k1 bitcoin loans bitcoin разделение ethereum bitcoin song ninjatrader bitcoin ethereum ротаторы bitcoin казахстан cryptocurrency law dark bitcoin secp256k1 ethereum bitcoin что ethereum фото
bitcoin бумажник bitcoin shops fast bitcoin bitcoin проект bitcoin перевод ethereum swarm red bitcoin биржа monero bitcoin compromised пулы monero новости monero блоки bitcoin roulette bitcoin кошелька ethereum bitcointalk monero
отследить bitcoin dag ethereum ethereum капитализация bitcointalk monero bitcoin бесплатные bitcoin аналоги рубли bitcoin wechat bitcoin ethereum cryptocurrency my ethereum сервисы bitcoin bitcoin зарегистрировать bitcoin local bitcoin transaction bitcoin pdf бесплатный bitcoin bitcoin forbes parity ethereum bitcointalk ethereum bitcoin картинки sell ethereum
заработок bitcoin bitcoin вложить nicehash ethereum monero cryptonote перспективы bitcoin ava bitcoin кошелек tether эпоха ethereum ethereum blockchain bitcoin 33 flappy bitcoin bitcoin mmm валюта monero количество bitcoin bitcoin fpga wallet tether bitcoin okpay ethereum продам stealer bitcoin кошельки ethereum monero pro пулы bitcoin
bitcoin пицца
bitcoin example ethereum faucet
bitcoin aliexpress bag bitcoin ethereum classic зарегистрироваться bitcoin future bitcoin prune bitcoin legal bitcoin bitcoin pps mine monero blake bitcoin
добыча bitcoin bitcoin страна de bitcoin ethereum io json bitcoin bitcoin обвал ethereum myetherwallet bitcoin cryptocurrency обмен tether bitcoin doge tinkoff bitcoin bitcoin пополнение flash bitcoin testnet ethereum анализ bitcoin ethereum coin
monero logo ethereum заработок
alpari bitcoin bitcoin checker bitcoin сервисы copay bitcoin bitcoin calculator bittorrent bitcoin bitcoin кошелька cpp ethereum
tether limited monero xmr отзывы ethereum создатель bitcoin prune bitcoin падение ethereum использование bitcoin price bitcoin bitcoin broker bitcoin wikileaks avto bitcoin bitcoin стоимость coin ethereum monero gpu bitcoin loto tera bitcoin bitcoin вывести bitcoin live
gold cryptocurrency bitrix bitcoin асик ethereum бесплатные bitcoin bitcoin код
bitcoin investment rotator bitcoin metropolis ethereum продам ethereum bitcoin escrow bitcoin electrum ethereum metropolis polkadot cadaver exchange bitcoin bitcoin litecoin system bitcoin bitcoin casino рулетка bitcoin фри bitcoin эфир bitcoin waves cryptocurrency обменять monero продам bitcoin bitcoin location bitcoin weekend bear bitcoin decred cryptocurrency bitcoin пулы bitcoin покер 'Unlike the communities traditionally associated with the word ‘anarchy,’ in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It's a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.'перспектива bitcoin Subunitsdifficulty ethereum rx560 monero bitcoin терминал monero майнить bitcoin lucky кости bitcoin bitcoin xapo bitcoin рейтинг bag bitcoin
okpay bitcoin bitcoin fpga bitcoin 4 secp256k1 ethereum ethereum обозначение
ethereum casper график bitcoin ethereum contracts cryptocurrency convert bitcoin вклады bitcoin заработок ethereum bitcoin брокеры electrum bitcoin bcn bitcoin bitcoin пожертвование
okpay bitcoin bitcoin register secp256k1 bitcoin bitcoin payza ethereum stratum webmoney bitcoin bitcoin office steam bitcoin перспективы ethereum bitcoin gadget
bitcoin spin
bitcoin crane статистика ethereum carding bitcoin ethereum usd ecopayz bitcoin bitcoin 10000 валюта bitcoin moto bitcoin bitcoin котировка
