What is cryptocurrency and how does it work?
"How do people use cryptocurrency?" asked a young patron at Wauconda Area Library summer STEAM camp.
Currency is used to purchase goods and services, such as how you use U.S. dollars, euros or zlotys to buy video games.
Cryptocurrency is a universal currency used to purchase items or services digitally. Microsoft, Expedia, CheapAir and Virgin Galactic and thousands more companies are taking payments in bitcoin, the original cryptocurrency.
There are many other cryptocurrencies that also qualify for financial exchange.
Cryptocurrency is different from cash or credit. Because it's a digital transaction, it is encrypted, so only the buyer and seller can exchange funds. Once exchanged, the payment cannot be altered or canceled. The transaction can't be intercepted by an unwanted party and will go unnoticed by traditional banks or other financial institutions.
Financial businesses might charge large fees for large cash exchanges, but digital exchanges carry low fees and can be made within seconds.
Each individual company backs its own cryptocurrency, unlike traditional cash, which is backed by governments.
Cryptocurrency and blockchain are linked - blockchain is the verifiable, encrypted sequence that retains digital exchanges, such as cryptocurrency. Hashes - special mathematical puzzles - are the chain that ties together the blocks containing the transactions.
To better imagine how these two are connected, cryptocurrency is like the video game Fortnite and blockchain is the Epic Games producer. Blockchain is a digital system used for many purposes, including supply chain logs that might retain information needed to document all the supplies and suppliers used to create the video game.
Blockchain is also used to verify real estate transactions, copyright and royalty ownership.
Many colleges and universities are offering coursework in cryptocurrency and blockchain. Big corporations are hiring experts, such as technicians, developers and attorneys, to establish and maintain blockchains.
The field steadily began to grow after the economic downturn in 2008 and has been expanding since.