ABOUT DIGITAL CURRENCIES

Digital currency refers to a type of currency available only in digital form, not in a physical form, such as banknotes and coins. While a digital currency exhibits properties similar to physical currencies, it allows for instantaneous transactions and borderless transfer-of-ownership.

Examples of digital currency include cryptocurrencies such as Bitcoin (which was the first decentralized ledger currency and most well known), Litecoin, Ripple and Monero. Digital currencies can either be centralized, where there is a central point of control over the money supply, or decentralized, where the control over the money supply can come from various sources.

BITCOIN

Bitcoin is a form of digital currency (or cryptocurrency) first proposed in 2008 and created in 2009 by Satoshi Nakamoto. While Bitcoin was not the first attempt at creating digital currency, it was the first to use a “blockchain” to keep a record of ownership with Proof of Work to verify transactions.

Bitcoins are created by computers and exist on the blockchain. In the early days, a single bitcoin was worth less than one tenth of a US cent, and they could be easily “mined” by a simple laptop or home computer. As bitcoin’s value soared to over $1000 USD in 2013, purpose built mining hardware had to be created to mine bitcoin. ASIC computers are far more powerful and efficient at mining than GPUs and are now what keep the Bitcoin network running. They are very expensive, though and have been criticised because most people cannot afford them.

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