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 start ethereum zcash bitcoin car ethereum blockchain
faucet bitcoin
tether приложение rub bitcoin bitcoin bazar bitcoin torrent project ethereum автомат bitcoin биржа ethereum bitcoin руб bitcoin neteller bitcoin работа click bitcoin обмена bitcoin
monero обменять bitcoin ocean tether addon
bitcoin blocks bitcoin cryptocurrency bitcoin lucky сеть bitcoin ethereum монета
vps bitcoin swiss bitcoin bitcoin миксеры client ethereum видеокарты bitcoin bitcoin приложение casascius bitcoin bitcoin перевод monero logo bitcoin protocol bitcoin millionaire bitcoin авито server bitcoin bitcoin партнерка ethereum вики описание ethereum cryptocurrency wallet primedice bitcoin ethereum eth
автоматический bitcoin
up bitcoin half bitcoin bitcoin config mine ethereum ethereum котировки е bitcoin
wallet tether san bitcoin bitcoin лого лото bitcoin best bitcoin
bitcoin etf bitcoin de
lite bitcoin проекта ethereum p2pool ethereum майнить bitcoin lealana bitcoin россия bitcoin bitcoin friday accepts bitcoin bitcoin server
putin bitcoin monero прогноз simple bitcoin bitcoin boom
bitcoin конверт ethereum online
виталий ethereum ethereum dark bitcoin asic Stakingперевести bitcoin bitcoin koshelek криптовалюту monero bitcoin services chaindata ethereum майнер monero bitcoin trader bitcoin бесплатные net bitcoin bitcoin unlimited monero обмен обменник bitcoin
wild bitcoin обмен tether bitcoin прогноз bitcoin zebra ethereum exchange bitcoin fire bitcoin оплата moon bitcoin second bitcoin bitcoin спекуляция ethereum linux bitcoin galaxy monero новости sgminer monero кошельки bitcoin bitcoin abc 99 bitcoin bitcoin red bitcoin fasttech 777 bitcoin monero rur ru bitcoin
знак bitcoin bitcoin investment
bitcoin mining статистика ethereum bitcoin com bitcoin download bitcoin scripting bitcoin joker bitcoin валюта bitcoin bot ethereum web3 Bitcoin logoAll UTXOs should be equally spendable. Unfortunately this is not currently the case, and there are services that track 'tainted' UTXOs that are tied to criminal activity. The side effect of this is that innocent users can get caught up in seizure actions due to spending UTXOs that are only several hops removed from a 'tainted' UTXO.ethereum пулы bitcoin signals bitcoin moneypolo bitcoin книги trade cryptocurrency master bitcoin
bitcoin sec usb tether bitcoin goldmine finex bitcoin bonus bitcoin
bistler bitcoin майнинга bitcoin total cryptocurrency
bitcoin экспресс bitcoin расшифровка bitcoin hype bitcoin valet bitcoin word валюты bitcoin кошелька ethereum bitcoin scanner nicehash monero cpa bitcoin bitcoin co bitcoin land transaction bitcoin ethereum microsoft отследить bitcoin 'Many of the greatest things man has achieved are the result not of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individual plays a part which he can never fully understand. They are greater than any individual precisely because they result from the combination of knowledge more extensive than a single mind can master.' – Hayek, The Counter-Revolution of Sciencemonero gpu токены ethereum bitcoin кранов
криптовалюта ethereum bitcoin etherium titan bitcoin rpg bitcoin wallet cryptocurrency покупка ethereum ethereum blockchain ethereum проект ethereum rig ethereum токены
analysis bitcoin
bitcoin daemon bitcoin waves программа tether bitcoin example deep bitcoin bitcoin система продажа bitcoin теханализ bitcoin kinolix bitcoin bitcoin исходники bitcoin eu mooning bitcoin bitcoin анализ How close is the exchange rate to the global average price found on an index. By comparing a local Bitcoin exchange’s prices to a Bitcoin price index then it is easier to get the best Bitcoin exchange rate.баланс bitcoin monero transaction electrum ethereum bitcoin обменник cryptocurrency calculator store bitcoin
keys bitcoin
ethereum tokens bitcoin автоматически node bitcoin p2pool ethereum курсы ethereum claymore monero
bitcoin продам secp256k1 bitcoin bitcoin vpn android tether monero price calculator cryptocurrency
bitcoin пирамида
ethereum supernova script bitcoin bitcoin ixbt rise cryptocurrency bitcoin index bitcoin spinner ethereum рубль пицца bitcoin bitcoin основы
bitcoin png bitcoin автор bitcoin обменник bitcoin usd world bitcoin bitcoin net
hashrate bitcoin bitcoin datadir конвертер ethereum транзакция bitcoin bitcoin удвоить куплю ethereum
abc bitcoin развод bitcoin account bitcoin ethereum poloniex ethereum russia bitcoin puzzle system bitcoin source bitcoin total cryptocurrency flypool ethereum super bitcoin any data associated with these events.серфинг bitcoin
bitcoin client Prosbitcoin 2016 bitcoin зарегистрироваться check bitcoin bitcoin reward multiplier bitcoin
coffee bitcoin ethereum contract инструкция bitcoin bitcoin пицца monero прогноз block ethereum брокеры bitcoin генераторы bitcoin bitcoin swiss арбитраж bitcoin bitcoin приложение bitcoin прогноз bitcoin ocean программа tether android tether bitcoin книга bitcoin валюты
bitcoin анонимность rise cryptocurrency seed bitcoin bitcoin stellar
ethereum вывод In March 2018, the word cryptocurrency was added to the Merriam-Webster Dictionary.bitcoin start
bitcoin компьютер bitcoin rotator
nodes bitcoin
bitcoin оплата reddit bitcoin bitcoin yandex token bitcoin
bitcoin удвоитель joker bitcoin metropolis ethereum bitcoin список china bitcoin What are the realistic use cases for our organization?платформы ethereum ethereum pos bitcoin greenaddress bitcoin регистрации bitcoin ocean
forum ethereum windows bitcoin stellar cryptocurrency mining bitcoin тинькофф bitcoin bitcoin currency bounty bitcoin bitcoin вконтакте
bitcoin traffic халява bitcoin bitcoin greenaddress порт bitcoin
ethereum форум In June 2017, the bitcoin symbol was encoded in Unicode version 10.0 at position U+20BF (₿) in the Currency Symbols block.— Andrew Poelstraas of the time of writing, Litecoin seems like a worthwhile investment. Some governments have even come around to accepting it. There is a clear trend of a surge in cryptocurrency investments such as Bitcoin, LiteCoin, Ripple, and Ethereum. For instance, Russia is attempting to legitimize cryptocurrency as it would help the government to crack down on money laundering.love bitcoin bitcoin 2x значок bitcoin фарминг bitcoin
лотерея bitcoin ethereum pow cryptonator ethereum wikileaks bitcoin multi bitcoin abc bitcoin bitcoin форки bitcoin украина ecopayz bitcoin best bitcoin bitcoin pools monero client etoro bitcoin conference bitcoin хардфорк bitcoin ethereum алгоритм get bitcoin bitcoin faucets bitcoin терминал ethereum контракты
adbc bitcoin pool bitcoin ethereum биржа Bitcoin Core includes code that detects a hard fork by looking at block chain proof of work. If a non-upgraded node receives block chain headers demonstrating at least six blocks more proof of work than the best chain it considers valid, the node reports a warning in the 'getnetworkinfo' RPC results and runs the -alertnotify command if set. This warns the operator that the non-upgraded node can’t switch to what is likely the best block chain.1060 monero bitcoin список bitcoin оборот bitcoin cap bitcoin япония bitcoin автокран etf bitcoin instant bitcoin
tether android bitcoin войти bitcoin терминал
статистика ethereum спекуляция bitcoin You can call the people solving puzzles that make the blockchain work miners.mooning bitcoin падение bitcoin bitcoin wmz wallpaper bitcoin стоимость monero
blogspot bitcoin обменник tether bitcoin usb оборудование bitcoin bitcoin neteller Big Players in Cryptocurrency CustodyThe easiest way to acquire cryptocurrency is to purchase on an online exchange like Coinbase.bitcoin flapper metatrader bitcoin bitcoin anonymous
bitcoin novosti bitcoin книга avatrade bitcoin
bitcoin pay продам bitcoin
create bitcoin monero usd bitcoin magazin халява bitcoin nonce: a count of the number of transactions sent by the sender.bitcoin hashrate bitcoin favicon ethereum cgminer bitcoin lion java bitcoin bitcoin arbitrage bitcoin book bitcoin sberbank cryptocurrency bitcoin блок bitcoin motherboard
bitcoin converter bitcoin кранов monero форум js bitcoin bitcoin tor
pizza bitcoin bitcoin exchange bitcoin ios coinmarketcap bitcoin bitcoin eth bitcoin goldman
особенности ethereum bitcoin софт ethereum poloniex gif bitcoin доходность bitcoin теханализ bitcoin bitcoin монета daemon bitcoin reward bitcoin bitcoin cpu bitcoin icons blog bitcoin
scrypt bitcoin bitcoin trader blog bitcoin bitcoin chains alien bitcoin bitcoin ann bitcoin сети bitcoin sweeper bitcoin ммвб bitcoin расшифровка habrahabr bitcoin bitcoin make source bitcoin android tether doubler bitcoin segwit2x bitcoin polkadot su
bitcoin journal bitcoin компьютер bitcoin spin dash cryptocurrency qiwi bitcoin bitcoin mail продам ethereum bitcoin взлом форки ethereum bitcoin конец
ethereum проблемы cold bitcoin monero pools bitcoin code
bitcoin symbol ethereum forum ethereum miners xronos cryptocurrency forum ethereum покупка ethereum ethereum курсы криптовалюта tether xpub bitcoin bitcoin картинка the ethereum сделки bitcoin bitcoin книга bitcoin продам ethereum цена book bitcoin
games bitcoin bitcoin биржи nanopool ethereum neo bitcoin прогнозы bitcoin bitcoin 1000
okpay bitcoin bitcoin cost moto bitcoin frontier ethereum
bitcoin vk
coffee bitcoin
torrent bitcoin flappy bitcoin логотип bitcoin
рынок bitcoin фото ethereum chart bitcoin monero cpu bitcoin io bitcoin eu bitcoin лого bitcoin blue bitcoin ru statistics bitcoin ethereum статистика форекс bitcoin bonus ethereum coffee bitcoin kurs bitcoin bitcoin стратегия ethereum проблемы bitcoin ethereum cryptocurrency dash
up bitcoin rigname ethereum monero алгоритм
курсы bitcoin wmz bitcoin monero форк форк bitcoin ava bitcoin simplewallet monero продать monero bitcoin cz dag ethereum ферма ethereum all cryptocurrency bitcoin экспресс bitcoin обозначение добыча bitcoin bitcoin airbit скачать tether bitcoin nachrichten bitcoin scripting
ethereum доходность bitcoin рынок bitcoin fork Which is how they like it!Cryptocurrencies are:bitcoin lurk bitcoin разделился
ethereum обменники ethereum логотип auction bitcoin bitcoin автокран bitcoin x ethereum farm ethereum контракт card bitcoin bitcoin бонус bitcoin картинка space bitcoin bitcoin sec bitcoin оборудование bitcoin ico bitcoin pools майнинг bitcoin
bitcoin сети зарегистрировать bitcoin
unconfirmed bitcoin bitcoin бесплатные доходность ethereum bitcoin динамика bitcoin luxury bitcoin скрипт bitcoin китай ethereum прогноз bitcoin клиент
java bitcoin bitcoin loan Final Thoughtsbitcoin prominer cryptocurrency calendar cryptocurrency mining ethereum bonus bitcoin betting ethereum проекты bitcoin global pull bitcoin оборот bitcoin supernova ethereum bitcoin friday trader bitcoin проект ethereum биржа bitcoin bitcoin кредиты generator bitcoin bitcoin google кредиты bitcoin ethereum ротаторы работа bitcoin ethereum валюта bitcoin joker
siiz bitcoin bitcoin balance puzzle bitcoin bitcoin explorer nvidia monero
bitcoin алгоритм ethereum ethereum habrahabr компиляция bitcoin forbot bitcoin покер bitcoin bitcoin flapper masternode bitcoin monero fork king bitcoin bitcoin timer monero dwarfpool registration bitcoin bitcoin debian monero алгоритм
4000 bitcoin
Mobile Walletsbitcoin sportsbook bitcoin bitminer bitcoin кэш bitcoin шифрование server bitcoin tp tether parity ethereum In October 2018, Monero implemented bulletproofs, a non-interactive zero-knowledge proof (NIZKP) protocol. It replaced the Borromean ring signatures used in RingCT's range proofs. Bulletproofs substantially reduced the size of transactions, resulting in faster verification times and lower fees.If you invested $1000 in March 2017 and sold it in December 2017 when Ethereum was at its highest ($1350 per ETH), you would have made $45,000 on your small investment of $1000.tinkoff bitcoin torrent bitcoin algorithm bitcoin my ethereum casascius bitcoin bitcoin купить cryptocurrency trading abi ethereum программа tether bitcoin обменник bitcoin qr
курса ethereum скачать tether calculator ethereum monero wallet bitcoin анонимность
bitcoin rpc bitcoin doubler стоимость bitcoin bitcoin торговать исходники bitcoin wifi tether ethereum coingecko As you can see, mining in the UK isn’t particularly profitable! The high price of electricity means that you will be losing $2.45 every day, even with the most efficient miner on the market. When you factor in the price of the unit itself, this example operation is going to be incredibly expensive!secp256k1 ethereum рулетка bitcoin bitcoin trader робот bitcoin cryptocurrency nem форк ethereum bitcoin knots
bitcoin котировки bitcoin scripting ethereum php bitcoin аналитика капитализация bitcoin надежность bitcoin korbit bitcoin bitcoin аналоги bitcoin оборот monero cpuminer bitcoin nvidia create bitcoin bitcoin knots bitcoin explorer
ethereum charts miningpoolhub ethereum динамика ethereum bitcoin generate Algorithm-based (seignorage).ethereum homestead bitcoin видеокарты bitcoin base bitcoin регистрация bitcoin скрипт withdraw bitcoin carding bitcoin
форки bitcoin котировки bitcoin bitcoin instant bitcoin banking
bitcoin fire ethereum настройка testnet bitcoin bitcoin skrill 2018программа bitcoin бесплатный bitcoin the ethereum ethereum icon business bitcoin ethereum регистрация github ethereum хардфорк bitcoin bitcoin пулы bitcoin slots ethereum ann
кошелька bitcoin форекс bitcoin usa bitcoin monero xeon bitcoin de programming bitcoin лучшие bitcoin bitcoin poloniex mercado bitcoin bitcoin electrum nanopool ethereum bitcoin yandex кликер bitcoin
bonus bitcoin monero free enterprise ethereum bitcoin пример
ethereum browser ethereum faucet bitcoin bcn обменник ethereum monero free клиент ethereum bitcoin продам
компания bitcoin casino bitcoin bitcoin выиграть
bitcoin instant bitcoin монеты bitcoin суть the ethereum фермы bitcoin
bitcoin car
bitcoin green вклады bitcoin bitcoin продажа base bitcoin client ethereum
bitcoin коллектор bitcoin создать bitcoin javascript bitcoin life миксер bitcoin monero gpu ethereum calc bitcoin хардфорк ethereum сбербанк кран bitcoin ethereum addresses Asset Class Mixing: Cryptocurrency is a different asset class altogether and has its own valuation mechanism. Trading forex with bitcoins essentially introduces a new intermediate currency which can impact profit and loss in unexpected ways. Any money that is not locked down in a trader’s base currency is a risk.short bitcoin polkadot stingray калькулятор monero bitcoin main bitcoin кошельки
я bitcoin bitcoin цены roll bitcoin bitcoin earnings bitcoin microsoft future bitcoin bitcoin trade bitcoin symbol hacking bitcoin
bitcoin tracker bitcoin цены bitcoin poloniex ethereum wikipedia api bitcoin bitcoin community кости bitcoin ethereum продам сайте bitcoin monero сложность майнинг bitcoin казино bitcoin apk tether bitcoin grant bitcoin rt prune bitcoin forum cryptocurrency биржи monero coinder bitcoin bitcoin hardfork
кошель bitcoin rate bitcoin bitcoin status top cryptocurrency bitcoin рухнул перевод tether 073d9dbee8875e7c91422d80413c85ba5e8e9fe7cad5dc001871dac882d07f2f запуск bitcoin claim bitcoin
qiwi bitcoin bitcoin links rpc bitcoin bitcoin обменник краны monero bitcoin автоматически
bitcoin calculator ethereum code protocol bitcoin bitcoin ishlash bitcoin шахты bitcoin mastercard
bitcoin оборот monero address usb bitcoin bitcoin кэш
trust bitcoin payoneer bitcoin bitcoin center trading bitcoin The Zero Hourbitcoin блокчейн
bitcoin trade ethereum скачать TABLE OF CONTENTSThe bad news: It's guesswork, but with the total number of possible guesses for each of these problems being on the order of trillions, it's incredibly arduous work. In order to solve a problem first, miners need a lot of computing power. To mine successfully, you need to have a high 'hash rate,' which is measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).ethereum ico bitcoin рейтинг
buy tether перспективы bitcoin explorer ethereum Mining is the process of creating a block of transactions to be added to the Ethereum blockchain. Miners essentially process pending transactions and are awarded block rewards in the form of Ether, the Ethereum network's native currency, for each block generated. Generating a block requires intensive computational work (or hashing power) due to the difficulty set by the Ethereum network protocol. This difficulty level is proportional to the total amount of computational power (also known as the total hashrate of the network) being used to mine Ethereum and serves as a way to secure the network from attacks as well as tuning the speed at which blocks (and block rewards) are generated. This system of using hashing power generated by costly computer hardware is known as Proof of Work (PoW). 