Cryptocurrency? It sounds like something from science fiction, right? Something straight out of the film Blade Runner that depicted a semi-lawless, dystopian world.
But in actuality, cryptocurrency is a modern-day phenomenon in how goods and services are exchanged. In fact, it’s is not only significantly changing the technology and coding industry, but also making a massive impact on how countries across the world conceive of currency.
Cryptocurrency by definition is a form of payment. But it’s not that simple. What differentiates it from the currency used in everyday life, is that cryptocurrency often exists within a specific ecosystem. In a nutshell, it functions like tickets used at a carnival to ride the Ferris wheel or play ring toss.
But what really makes cryptocurrency such a disruptive force is its incorporation into our digitalized world. The number of cryptocurrencies continues multiplying, and there are no signs of slowing down.
To better understand what exactly cryptocurrency is, what it can be, and how today’s coders, developers, and technology professionals can leverage cryptocurrency as part of their work, let’s examine a brief history of crypto to better understand where it’s going and how it’s going to move.
The Cryptocurrency Timeline
Many think cryptocurrency is a concept developed and launched in the last decade or so, but the history of cryptocurrency reaches as far back as 1983. These virtual coins can be traced back to one man: cryptographer David Chaum.
Chaum developed the first brand of digital currency with a transaction system called eCash, which was followed by another iteration of the same principle a few years later with DigiCash. The foundational element to DigiCash (and one that remained foundational in the cryptocurrencies that followed in DigiCash’s footsteps) is that transactions were anonymous and conducted over a public network.
Though the term cryptocurrency was not coined until the late 1990’s, Chaum’s first forays into the arena established critical frameworks for future incarnations of this new way of exchanging goods and services. It would be even more fully realized with the global economic downturn of 2008, when the value of gold and coins fell dramatically.
Enter the so-called “Japanese entity” Satoshi Nakamoto (who still remains anonymous to this day). In 2008, Nakamoto published a widely-circulated whitepaper on the potential of cryptocurrency and conducted the first transaction with the most well-known cryptocurrency to this day: BitCoin.
Satoshi Nakamoto also invented the blockchain database whereby BitCoin and a majority of the other cryptocurrency platforms conduct business and house information about the actors within the platforms. In fewer than two years after the first BitCoin and blockchain transactions, other coders and developers had successfully minded the blockchain. Their efforts not only increased the number of Bitcoin transactions, but also developed new cryptocurrency platforms to further increase the footprint of these digital tokens.
Despite minor setbacks during the mid-2010’s, BitCoin not only established itself as the cryptocurrency of choice for those around the world, but its value skyrocketed, eventually reaching $10,000 in November 2017. Interest from social media stalwart Facebook further cemented BitCoin in the cryptocurrency space, and also contributed to a second major spike in the platform’s value.
Brands of Cryptocurrency
While BitCoin certainly is the most popular and influential cryptocurrency in today’s market, that does not mean there aren’t a variety of other cryptocurrency platforms jockeying for status, influence, and impact, and who are sizable, significant players in the crypto space. Here are a handful of the important alternatives to BitCoin:
- Ethereum, a decentralized software platform, allows for Smart Contacts and Decentralized Apps to be constructed and operated without downtime, fraud, control, or interference from a third party. Ethereum is designed to create a decentralized suite of financial products that anyone in the world can have free access to, which makes the platform more appealing to those in countries without state infrastructure and state identifications.
- Litecoin, which launched in 2011, was among the first cryptocurrencies to follow in the footsteps of Bitcoin and has often been referred to as BitCoin’s little brother. Litecoin is based on an open-source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and offers a faster transaction time. Other than developers, there are a growing number of merchants who accept Litecoin, and the platform is the sixth largest cryptocurrency platform in the world.
- Cardano was co-founded by Charles Hoskinson, one of the initial five founding members of Ethereum. Created with a research-based approach by engineers, mathematicians, and cryptology experts, the platform has been dubbed the “Ethereum killer” as its blockchain fosters a more data-driven approach to development and innovation. As part of its ‘proof-of-state’ founding principle, it does have a sizeable leg-up on Ethereum, though the platform still has much work to do in the way of decentralized financial applications.
- Polkadot is an innovative proof-of-stake cryptocurrency aimed at delivering interoperability between other blockchains. Its protocol is designed to connect permissioned and permissionless blockchains as well as oracles to allow systems to work together under one roof. Polkadot’s core component is its relay chain that allows the interoperability of varying networks. Founded by another initial member of Ethereum, Gavin Wood, the platform has been identified as a quick ascender in the cryptocurrency space.
Creating a BitCoin Node
Given the amount of time we’ve dedicated to discussing BitCoin and the shortlist of cryptocurrency platforms looking to dethrone it, let’s look at a brief coding schematic of how to construct a BitCoin node. For today’s coding, development, and technology professionals, this is one of the better ways of truly grasping the relevance on cryptocurrency.
First, you’ll need to gather and establish the necessary components to create a BTC (BitCoin Core), which is an open source, peer-to-peer network that allows for transactions without relying on a third-party financial institution.
The BTC network consists of three ingredients:
- Users, which are the people who participate in the transaction within the network on the platform.
- Miner nodes, which are nodes that validate and process user transactions.
- Validator notes, which participate in valid transactions but do not mine or actually generate BitCoin.
With these component elements in place, first you’ll need to create, verify, and launch EC2 instance. Next, you must configure the BitCoin core binaires on the EC2 instance, and lastly you’ll need to start the BitCoin node by utilizing the ‘run’ command. In addition, it’s important to look at the preliminary results to ensure error-free functionality as well as to occasionally review the code for updated values.
The Value of Cryptocurrency
Much discussion can be had about the value of cryptocurrency relative to other ‘hard’ forms of currency, or whether cryptocurrency has the legs to last in the long-term as a viable digital platform. However, what is undoubtedly true, is that cryptocurrency has seeded in the mind of today’s most innovative, ambitious coders the possibilities of converting real-world aspects of a traditional economic system into digital forms.
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