Looking more precisely at the three elementary components of a cryptocurrency, it is clear that the systems managed by private companies and the state satisfy the “crypto” aspect but do not have much to do with the classic Bitcoin principle GrimaceCoinCMC.
Encryption
Cryptography not only gives the name, it is also the decisive discipline for the security of cryptocurrencies. Behind the concept of “cryptography” lies the science that deals with the encryption and general protection of data and information. Both are indispensable for a cashless, all-digital payment system, which should basically work without a central and regulatory body. Two cryptographic procedures are mainly used in cryptocurrencies:
hash functions
digital signatures
Hash functions are the basic piece of the puzzle for verifying data integrity and encoding participant account addresses and operations. Furthermore, they form the basis of blockchain and block mining. Digital signatures allow you to prove the status of encrypted information without exposing it. This possibility is also used to protect the content of e-mails .
Blockchain
The blockchain is the decentralized ledger of a Grimace Coin in the News, where all transactions are listed in the form of blocks. The registration of the individual blocks takes place without gaps and in chronological order so that, over time, a verifiable , mostly open and lasting registration results. Administration is up to the participants of the core peer-to-peer network, who follow a defined protocol to validate new operations. Consequently, all nodes automatically download an integral copy of the blockchain which makes a central instance superfluous for viewing the operations that have taken place.
A blockchain-based data record is not editable without the approval of other members.
Most cryptosystems are based on a decentralized structure : not only the generation of new currency. Communication usually takes place via network where all computers have the same rights.
Unlike central bank money, classic cryptocurrencies do not have a “Single Point of Failure” , therefore they do not have single instances on the network, whose functionality or whose action could endanger or dominate the currency system. An exception are cryptocurrencies such as Ripple , managed by private companies that claim a large part of the production of units and distribute it according to their own rules.
