Cryptocurrencies are a type of digital currencies, which are used as a medium of exchange. It uses encryption techniques called ‘Cryptography’, to transfer value, execute controlled replication, and verify transactions on a blockchain. The replication of cryptocurrency depends upon the kind of consensus mechanism a blockchain uses. A blockchain with Proof-of-Work (PoW) uses mining to replicate cryptocurrency, while a blockchain with Proof-of-Stake uses stakes to replicate its cryptocurrencies. Similarly, blockchains with other consensus models have different ways to do so.
Don’t be surprised when I tell you that the concept of cryptocurrency is older than the World Wide Web itself. American Cryptographer, David Chaum, built a cryptographic electronic cash system for payments in 1983. However, the project, for some reasons, shut down in 1998.
In 2008, a fortified, decentralized form of cryptocurrency was released as part of a ‘Peer-to-Peer Electronic Cash System’ called ‘Bitcoin’ by an anonymous developer with a pseudonym ‘Satoshi Nakamoto’. Till date, the identity of Satoshi Nakamoto is unknown. Since the launch of Bitcoin, various cryptocurrencies like Ether, Litecoin, IOTA and more, were released, which aim to disrupt fiat currencies in terms of utility and value.