Can we skip ahead to the part where we don’t have to go through what Bitcoin is? Good. Ok, just to be fair, just a single line dedicated just to you beautiful people out there who have either been living in Serbia for the past ten years without access to internet, and for the ones that are extremely tech-unaware.
Bitcoin is the most famous version of digital money (cryptocurrency) that is exactly (but not really) like real money. It has no centralized source to regulate it and in most cases the transactions you do with this cryptocurrency is completely anonymous. That’s more than a single line but pretty easy to understand right? It’s actually so easy to understand that making your own cryptocurrency is also pretty simple. And this is exactly what we are going to do in this article. Make our own money. Let’s get to it.
Cryptocurrency within the lines
Bitcoin might have been the most famous out of them all but it’s certainly not the only cryptocurrency that exists. In fact there are over 800 different versions of digital money that use the same principles as Bitcoin. So what’s stopping us from making our own?
Before reading on, if you are under some misconception that you’ll pretty soon be able to create a million dollar note and it will be worth a million dollars recognized by banks and financial institutions, that’s not going to happen. For the rest of you still around who just think it’s cool to be able to make your own digital money that has a certain amount of value let’s proceed.
- No central authority will process our transactions
- The internet will be the sole medium of making transactions
- Users will have complete anonymity and the only way to distinguish one from the other is through their virtual identities
- There is no limit to the number of virtual realities a person can have
- A controlled way must be implemented to add new virtual bills
That’s it No more rules. Let’s make some money!
Anonimity and decentralization
Let’s get two rules that we made in our list out of the way, since those two are probably the most important. One was all transactions need to be made over the internet and the second one was that there wouldn’t be a centralized source that controls and processes our transactions. Both are made entirely possible by using peer-to-peer (p2p) networks. If you are wondering what a P2P network is then its very likely you’ve been using one and didn’t even know it. The best example would be torrent sites. Torrents work through P2P. Another common P2P network is Skype and other chat applications.
Your digital identity
Hashing is an integral part of digital identities. To explain, hashing is the process of taking information that can be read and understood and jumbling it up so that it makes no sense whatsoever.
A few things need to be put into pace to make a good hashing algorithm. For this the following needs to happen:
- When data is input even the smallest change produces a significant difference in what is output
- If something similar has been input before it will produce the same output.
- The output length of the hashing must be fixed
- The input value cannot be calculated by reversing the output value by an
- y way
- The calculation of the HASH value should be fast and not compute intensive
Keep reading to know more
Ok, now you know that small data is converted into impossibly large chunks called HASH. This is to get a better idea of the mechanics of how you are able to have an identity online while still being anonymous i.e a virtual identity. To know how to actually create money online that has some monetary data attached to it you’ll have to check back here for next weeks blog which im warning you from now gets a little complicated but at the end of it you have your own money so it all works out.