Cryptocurrencies have taken the world by storm. They have changed the way we transact and made us think more and more about how money is saved and what should be classified as a safe haven asset. They were once thought of as the exclusive realm of some crackpot computer scientists and STEM students. They have evolved and are taking on the large financial institutions.
Cryptocurrencies are essentially digital cash that is proof of a transaction that occurred sometime in the past. This record of the transaction is a valuable claim someone will have to a limited resource that is the cryptocurrency in question. One of the first cryptocurrencies to use this method was Bitcoin.
Bitcoin was developed with the sole purpose of being a peer to peer currency. People could send Bitcoin to anyone across the world at a relatively low cost. This would also be done at a relatively low cost as they were transacted over the Bitcoin network. Bitcoin was interesting for a number of other reasons as well. The total number of Bitcoins that will ever be mined is also limited to only 21 million coins. This means that it is naturally deflationary and can be a good hedge against governments that print a lot of money.
Cryptocurrency is also decentralized which means that there is no controlling body who determines what to do with the network. It is run by all of the participants across the network nodes. The coins are also only generated through a process called mining. This is essentially just a bunch of computers that will contribute processing power to solve the complicated mathematical problems that need to be cracked to verify these transactions.
These miners are rewarded with Bitcoin for completing their work. This is how Bitcoin will naturally increase in supply. However, the mining becomes much more complicated to the extent that supply will eventually taper off as the algorithms become harder to solve and the machines try to catch up as much as possible.
Of course, this is just Bitcoin. In the STEM field, there are a number of other cryptocurrencies that are making waves. One of the best competitors to Bitcoin at the moment is Ethereum. This is a cryptocurrency that aims to change the way that we think about centralized applications and the client server model. They are all about the creation of smart contracts on the blockchain that will pave the way for the creation of a large and decentralized virtual machine.
In order to reward the application developer as well as pay for the processing of these contracts on the blockchain, a token called ETH is used. This is the cryptocurrency that drives the Ethereum network and has increased by over 5,000% over the past year.
Ethereum is also allows for other developers to raise funds on the network through the use of their blockchain and the virtual machine. This is the creation of large scale ICOs which are Initial Coin Offerings. These ICOs try to raise Ether for their own projects and then in return for the Ether, offer their own digital tokens to the public.
The fact that cryptocurrenceis are so popular is only one of the factors at play. The Blockchain technology itself is where many people see immense potential. This will allow the creation of decentralized networks that can do a number of things including improving security, use in supply chains, identity management, government services. Really, the possibilities in STEM are really endless.
This the reason that blockchain technology has captivated so many companies in the world. They want to be the first to develop their own applications that can run with the technology.