Cryptocurrencies are getting popular day by day. Bitcoin was the first-ever cryptocurrency and is the most popular one right now. At present, there are more than 6700 cryptocurrencies around the world. In the future, where the world may go cashless with different kinds of electronic money, and all financial transactions may become digital, cryptocurrencies have some scope and possible prospects.

What is cryptocurrency?

Fernandez 1 Yoandra Fernandez Professor Gomez Introduction to Information Technology February 13, 2021 History of Cryptocurrency The internet is a network tool that millions of individuals use every day. Whether it be on a desk top computer, laptop, tablet, or mobile device, the internet can be easily accessible to millions of individuals around the world at any time of the day.

• Before we assess the current state of the cryptocurrency exchange market, it is.
• Cryptocurrency Historical Data Snapshot.
• The History of Cryptocurrency The first decentralized digital cryptocurrency can arguably be traced back to “ bit gold ” (not to be confused with Bitgold), which was worked on by Nick Szabo between 1998 and 2005 but was never implemented.

A cryptocurrency is a form of digital money that can be used to buy goods and services online. The users purchase “coins” or “tokens” of a given cryptocurrency in exchange for a real currency, like dollars. There are thousands of cryptocurrencies traded publicly at present, Bitcoin being the first and the most popular one.

Unlike real currencies that are regulated by a central bank or government of a country, cryptocurrencies are maintained by a decentralized peer-to-peer network of computers called “Blockchain” technology. Each “coin” is basically a unique line of code that cannot be duplicated within the cryptocurrency’s infrastructure. Therefore, each “coin” can be uniquely identified and tracked while it is exchanged or traded within the network. The record and trading history of each “coin” is maintained in a shared digital register/ledger of data called “Blockchain”. In context to cryptocurrencies, a blockchain is a digital ledger that keeps the transaction history of every unit of the cryptocurrency, i.e., the ‘coins’, and keeps a record of how ownership of ‘coins’ changed over time. Each transaction of the given cryptocurrency, be it online purchase of a good or service or trading of ‘coins’ is recorded as a ‘block’, with new blocks added to the front of the chain.

The blockchain is a distributed ledger. The blockchain file is stored on many computers across the network. Whenever units/coins of a given cryptocurrency are traded or transferred, the transaction is verified by blockchain ‘Miners’, and the transaction is broadcasted for an update in every blockchain file. As the blockchain file is not stored on a central server or location, the possibility of generating counterfeit ‘coins’ or making fraudulent transactions is negligible. The blockchain file is readable by everyone within the network, so every transaction is transparent and secure.

Cryptocurrencies have a high level of security. The new blocks are linked in the chain using cryptography that involves complex mathematics and computer science. If the blockchain data is tried to be altered by a hacker or a fraudulent, the cryptographic links between the blocks are disrupted with the immediate identification of the fraudulent ‘node’.

Cryptocurrency is a kind of digital money that is not regulated by any central authority or government but is valid within and maintained by a distributed, peer-to-peer network of computers. The units or ‘coins’ of a given cryptocurrency can be obtained via Initial Coin Offerings (ICO), purchasing by real currency at an online cryptocurrency exchange, by trading with other cryptocurrencies, offering goods and services for a given cryptocurrency, or as a reward by blockchain mining.

How does cryptocurrency work?

Cryptocurrency is a decentralized unregulated digital monetary system. When a person buys a given cryptocurrency, it is stored in a digital wallet. The digital wallet is accessible either through an app or a vendor. Each person with the wallet is assigned a public and a private encryption key. The private key is required to sign off’ any transaction. It works like a digital signature to validate any purchase or transaction. Every transaction ever made is recorded in the blockchain. The blockchain is a public ledger that is visible to all persons within the network. The entries in the ledger cannot be changed without fulfilling specific conditions. Nobody has control or regulation over the ledger. It is a self-governed database stored at multiple locations in a shared distributed network of computers. A person with the digital wallet of a given cryptocurrency becomes part of the network. Any person or institution outside the network has no interference with a given cryptocurrency.

Every transaction in a cryptocurrency happens peer-to-peer between two persons. When a transaction is made, it is initially unconfirmed until verified. The verification of a transaction is completed by a cryptocurrency ‘miner’. The miners use powerful computers to solve complex algorithms to verify a transaction. Cryptocurrency mining is open-source. Anybody provided is part of the network, can perform ‘Mining’ and confirm a transaction. The first miner to solve the complex mathematical problem gets the chance to add a new block in the blockchain and is rewarded with the given cryptocurrency. Solving the complex mathematical problem is called a ‘proof-of-work system’. Once a transaction is successfully verified by a ‘Miner’, it is added to the blockchain ledger. This way, the ownership of given ‘coins’ is changed and updated in the ‘ledger’. As the ledger is public worldwide, changes in the ownership of ‘coins’ or ‘tokens’ are visible to all persons within the network.

Is cryptocurrency valid?

There have been doubts regarding the validity of cryptocurrencies. Cryptocurrencies are legal in the United States and many other countries. In the United States, cryptocurrencies like Bitcoin are subject to capital gains tax. The legal validity of a cryptocurrency depends on each country. Many countries have banned cryptocurrencies, while in many countries, there is no clear legislation regarding them. Any cryptocurrency is a parallel monetary system based on shared trust among its holders. Obviously, it is valid within its online community and can be used without a doubt for purchasing goods and services within its network of users.

As the cryptocurrencies are purchased by real currency and can be traded for real currencies, like dollars, at online cryptocurrency exchanges, it definitely has some value in the countries where a given cryptocurrency is legal. Many popular cryptocurrencies have a market capitalization of billions of dollars, making them widely acceptable among large online communities and networks. Due to the wide acceptance of many cryptocurrencies and the availability of reliable systems for their trading in real currencies, cryptocurrencies are somewhat trust-worthy.

Instead of real currencies, cryptocurrencies are better compared to stocks. They are worth investing in or purchasing as far as they have good market capital and trust among online communities. No government or central authority regulates a given cryptocurrency. It is self-regulated on a supply-demand basis. The validity of a given cryptocurrency only depends upon its online community and total market capital.

A lot of people see cryptocurrencies as an investment that may give exponential returns in the future. Remember, cryptocurrencies have no legal regulation, and it is just virtual money that is acceptable within confined online communities. Investment in such instruments can be risky. Nobody knows what comes in the future, whether popular cryptocurrencies will become acceptable parallel payment systems or may get discarded someday due to trust issues, security reasons, or by the law. The key holds in the future. Anyone looking for investment in a cryptocurrency must take it as a dead investment that may give an exponential return someday or turn into lost money forever.

Important cryptocurrencies by market capital

There are more than 6700 cryptocurrencies in 2021. The top 20 cryptocurrencies by market capitalization as of March 6, 2021, are listed below.

You can learn about current market capitalization and other statistics of important cryptocurrencies from CoinMarketCap.

Why are cryptocurrencies gaining popularity?

Most of the people interested in cryptocurrencies are attracted by a skyward rise in their values. Cryptocurrencies are highly volatile, and their value rises and falls sharply. A lot of people gain interest in cryptocurrencies for the blockchain technology behind them. Such people usually engage in buying cryptocurrencies for experimental purposes. Many people like the decentralized and unregulated nature of cryptocurrencies, while many from generation Z engage in buying cryptocurrencies for fun. Cryptocurrencies can be seen as similar to stocks or commodities. However, there is no legal authority to monitor and regulate them. Therefore, their future is best unknown.

Online brokers for cryptocurrencies

Some of the top online brokerages and cryptocurrency exchanges are Coinbase, eToro, FTX, Liquid, Robinhood, Kraken, SoFiactive Investing, Deribit, Tradestation, Phemex, Bybit, bitFlyer, Binance, and Bitmax.

Best cryptocurrency trading platforms –

Some of the best cryptocurrency trading platforms are Bitcoin Era, Bitcoin Up, Binance, Kraken, eToro, CEX.IO, Bitfinex, and Shapeshift.

Risks of investing in cryptocurrencies

Remember, all cryptocurrencies are virtual money. Their value is based on a supply-demand basis. They are highly volatile, with their value going through extreme ups and downs. There are lots of unknowns in investing in cryptocurrencies. Most people do not understand the blockchain technology behind it and are prone to fraudulent activities. Money laundering is a major issue with cryptocurrencies. These virtual currencies are suspected to be used for the dark web. Trading in cryptocurrencies is similar to gambling. It may give an unproven and unpredictable return of investment. The lack of any regulatory authority or common legislation makes the future of cryptocurrencies uncertain.

How much is it worth?

Blockchain technology is interesting and useful in several other areas as well. If you are interested in cryptocurrencies for learning blockchain technology, cryptocurrency is a practical way to engage with it. If you are looking into cryptocurrencies as investment instruments, beware, there is no shortcut to wealth generation, be it stocks, commodities, or cryptocurrencies. Particularly, in context to cryptocurrencies, you never gain any profit until you find a ‘greater fool’ who is ready to pay more than you for your holdings. After all, all cryptocurrency transactions are peer-to-peer affairs. If you are interested in blockchain mining, the rewards largely depend on your luck. If you have a budget for a powerful computer, you may try blockchain mining. Still remember, blockchain mining is largely unprofitable, and the rewards for blockchain mining are a matter of luck.

In the Bitcoin white paper, Satoshi Nakamoto wrote that “Proof-of-work is essentially one-CPU-one-vote”— referring to the fact that most people who joined the fledgling network would use their CPU's processing power to mine on the network.

Fast-forward 10 years and the cryptocurrency mining landscape has changed unrecognizably. Last year, the Chinese mining giant Bitmain announced that it was initiating IPO proceedings at a valuation as high as $18 billion. Today's miners no longer rely on the CPUs in their laptops, but mining farms with racks of ASIC chips, located near cheap electricity sources.

How did we get here? In this article, we'll walk you through a decade of cryptocurrency mining history.

Genesis Block — CPU Mining

On January 3, 2009, the first block—or genesis block—on Bitcoin's blockchain was mined by Satoshi Nakamoto. For the first few months following Bitcoin's launch, Satoshi Nakamoto and Hal Finney were the only people actively mining bitcoin on the network.

In the early days of Bitcoin there wasn't any sophisticated mining hardware around, which meant that anyone could join the network with their laptops and mine, earning a 50 BTC reward per block—or roughly $250,000 at today's prices.

For nearly the first year after Bitcoin launched, the difficulty level of mining remained static at 1. That meant that you needed to perform around four gigahashes to mine a block. At the time, a Pentium 4 Intel CPU was capable of producing around 1.29 megahash a second, which meant it would take you roughly 50 minutes with a single CPU to mine a block of Bitcoin.While the idea for mining Bitcoin via GPUs had been circulating in the Bitcoin community, Satoshi put the brakes on this idea, arguing that in the short term, it would be more beneficial to the new and vulnerable network to not allow GPU mining.

In December 2009, Satoshi posted to the Bitcoin Talk forum:

We should have a gentleman's agreement to postpone the GPU arms race as long as we can for the good of the network. It's much easier to get new users up to speed if they don't have to worry about GPU drivers and compatibility. It's nice how anyone with just a CPU can compete fairly equally right now.

In 2010, increasing publicity around Bitcoin drew new users—and miners—to the Bitcoin network. That year, version 0.3 of the Bitcoin client was announced on Slashdot, a popular social news website. At the time that the Slashdot announcement was posted, the difficulty of mining Bitcoin was 23.5. A week later, on July 17, difficulty skyrocketed 7x, to 185, as new users and miners joined the network.

The early days of Bitcoin mining, when anyone could earn a block reward with their laptop, was coming to a close.

GPU mining

In September 2010, a Bitcointalk user named Puddinpop open-sourced the code to a Bitcoin client that enabled mining with GPU cards, ushering in a new era of Bitcoin mining. GPU graphics cards were capable of mining an order of magnitude more efficiently than CPUs, ushering in an arms race for mining hardware.

History Of Cryptocurrency Pdf

A CPU, or central processing unit, is designed to execute instructions specified by a computer program. A CPU is designed to perform general purpose computing tasks, and it's optimized to be able to quickly switch between these tasks. Unlike CPUs, GPUs are designed to perform the type of repetitive calculations necessary to render video graphics on your computer—making them much better suited to perform the type of bulk calculations necessary to mine cryptocurrency.

Before Puddinpop open-sourced his code, it was already becoming increasingly clear that individuals on the Bitcoin network were breaking Satoshi's “gentleman's agreement” and using GPUs to gain an edge in mining. One early Bitcoin user, known by his Bitcointalk forum handle ArtForz, at one point purported to control 20% of the hash rate on the network, with a home-built mining farm made up of two Radeon 5970 GPUs and another four Radeon 5770s, hauling in an estimated 2,191 BTC per day.

The open-sourcing of GPU mining software opened the floodgates to GPU mining. Pretty soon, a new standard for mining evolved by repurposing consumer hardware, rigging together up to six GPUs to a motherboard specifically for the purpose of mining. As more GPUs entered the network, mining grew a lot more competitive. At the beginning of 2010, mining difficulty was at 1.183, having barely risen since the network launched. By the end of that year, difficulty had risen meteorically to 14,480.

Mining Pools

With the rise of GPU mining, it suddenly became a lot harder for individual miners on their home computers to eke out a profit. This led to the creation of pooled mining, which allowed miners to pool together their hardware and earn block rewards in proportion to the hash rate they contributed.The first Bitcoin mining pool was proposed by Bitcointalk user Slush on November 10, 2010, on the Bitcoin Talk forum:

Once people started to use GPU enabled computers for mining, mining became very hard for other people. I'm on bitcoin for few weeks and didn't find block yet (I'm mining on three CPUs). When many people have slow CPUs and they mining separately, each of them compete among themselves AND against rich GPU bastards ;-), because everybody counts sha256 hashes from the same range. Two separate CPUs with 1000khash/s isn't the same as one 2000khash/s machine!. But new feature of the official bitcoin client called 'getwork' now enables work of many computers together, so they don't compete. Because there is now standalone CPU miner (thanks to jgarzik!) and 'getwork' patch is in official client now, I have an idea:
Join poor CPU miners to one cluster and increase their chance to find a block!

With a hash rate of 1000 KH/s in December 2010, it might have taken you two years to earn a single 50 BTC block reward. Mining pools allowed miners within a pool to spread the distribution of block rewards among themselves more evenly over time. Today, pooled mining dominates Bitcoin, with the top four pools controlling over 51% of the hash rate, which is typical across proof-of-work cryptocurrencies.

FPGAs

Between 2011 and 2012, a new type of chip was about to enter the mining hardware race: the FPGA, or field-programmable gate array.

FPGAs are chips that are designed to be reconfigured by users after purchase from the manufacturer. They're typically used to perform specific vertical applications with low production volumes, such as within aerospace or high-performance computing.

In theory, an FPGA's customizability gave miners better performance and lower electricity costs. In practice, things were different. It was hard to optimize FPGAs around Bitcoin's SHA-256 hashing algorithm, and they suffered frequent malfunctions. FPGA's also offered only minor performance gains over GPUs while being harder to acquire and set up. This made them a short-lived phenomenon in mining history.

The customizability of FPGAs, however, heralded the arrival of a new type of mining chip that would be specifically designed for the purpose of mining.

ASICs

On January 30, 2013, Bitcoin developer Jeff Garzik received the first Bitcoin ASIC miner developed for consumers. At the time, most GPUs offered a hash rate of under 1 GH/s, and FPGAs could achieve a hash rate of between 1-2 GH/s.

Application-specific integrated chips, or ASICs, are chips that are optimized to perform one specific function rather than a variety of general-purpose functions, like a CPU is. While they lose a lot in flexibility—a Bitcoin ASIC miner won't be able to do much besides hash SHA-256—they gain in efficiency and performance.

The Avalon A3256 ASIC that Garzik purchased offered a hash rate of a staggering 60 GH/s, for a sticker price of $1,299. By February 9, 2013, Garzik reported that the miner had already paid for itself.

While it's virtually certain that mining companies had been deploying their own ASICs throughout 2012, the rise of consumer ASICs permanently altered the mining landscape. ASICs heralded a shift in mining away from hobbyist GPU rigs to professional mining farms with racks of ASICs. GPUs rigs remain valuable for mining coins that ASICs haven't been designed for, the arrival of ASICs on a network will quickly outcompete other forms of mining.

This was something that Satoshi had predicted before Bitcoin launched:

“At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.”

Over the years, ASICs only improved in terms of performance and efficiency. Bitmain's S9 miner is capable of performing 13 TH/s, or 216x more hashes per second than the first Avalon ASIC miner.

History Of Cryptocurrency And Bitcoin

Ten Years of Mining

History Of Cryptocurrency Timeline

Over the last decade, cryptocurrency mining hardware has evolve rapidly from the early days of CPU mining, to hobbyist GPU rigs and FPGAS, to today's ASICs. While the rise of ASIC mining in established coins like Bitcoin is unfriendly to smaller miners, there's opportunity for individual miners to speculatively mine smaller altcoins that ASICs haven't been developed for. Innovation in the overall mining sector moves at a rapid pace, but the important thing to keep in mind is that it all goes to helping better secure decentralized, peer-to-peer networks.