Cryptocoin Basics - Introduction
Cryptocurrency, or cryptocoin as we commonly call it here, is a digital
currency (or digital asset). Cryptography is used to control the creation
of the asset and to verify and protect transactions. It may seem strange
to apply a value to an asset seemingly created out of thin air, but it is not
that different than whales' teeth or wampum beads, or even most national
currencies of today. The key factors in any currency are 1) scarcity, both in
supply and in the ability to create, and 2) willingness of others to trade goods
and services for the currency. Any asset with intrinsic value, such as
gold and silver, has an advantage. But the fiat money we use today is not
backed by a commodity; it is backed only by faith in the government.
Most cryptocurrencies meet the scarcity requirement, as these have a maximum
amount that can be "mined" (more about this later), or at least limit
the rate of production. Currencies that have a maximum supply that will ever
exist (such as Bitcoin, Litecoin and Monero) are considered deflationary.
Ethereum, by contrast, currently has no maximum supply and is considered inflationary.
Considering the second factor, willingness to accept the asset for goods and
services is more difficult to achieve. Quite a few businesses are now accepting
Bitcoin for payment, although the hundreds of other cryptocoins (called altcoins)
have not yet achieved mainstream acceptance. Regardless, most cryptocoins enjoy
healthy trading with other cryptocoins and traditional currencies.
The following pages give a brief overview of cryptocoins. You can get more detailed information by digging deeper into the many resources available
on the web.
- Coin Creation and Transactions
- Cryptocoin Wallets
- Mining for Coins
- Coin Values