Cryptocurrency

Charon takes cryptographically protected money

A cryptocurrency is a digital or virtual asset designed to work as a method or medium of facilitating exchange. Cryptocurrency uses robust cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

Cryptocurrencies are typically decentralized and often anonymous. The main purpose of a cryptocurrency at the network level is to facilitate blockchain transactions. In this case crypto like Bitcoin and Ether are used to pay for network fees.

Crypto = short form of cryptography

Currency = a system of money in common use

Cryptocurrency issued by blockchains are used to pay for transaction processing and to reward miners— aka workers —who spend the time, energy and computations required to propagate the blocks of transactions.

The process of mining does not require heavy machinery and there are no exuberant overheads— no additional fuel aside electricity —that are not self incurred by either a greed, control or profit motive.

Electricity used to power miners is insignificant and easily made more efficient by directing the energy released toward other practices such as;

  • Supplemental heating

  • Power conversion

  • Air flow

Compared to traditional fields, nearly no humans are abused in the process of facilitating blockchain transactions. There may be cases where unsafe work practices may cause danger to be prevalent, however, miners are not indebted to one network and can be adjusted to provide computational power to other networks.

Miners have significant freedom because miners are computers or components of computers that supply a portion of their power or all of their power to a blockchain network. They are externally controlled by people.

Miners facilitate transactions, organize blocks, compete for rewards and keep the network going. But no person needs to make calculations or use physical labour to maintain the network.

Miners are powerful computers called; ASICs GPUs and CPUs are also used to 'mine' cryptocurrency

The largest example of tokens deployed to a blockchain are ERC-20's.

ERC-20 is an Ethereum token standard that allows developers to follow a set of standardized procedures & practices when deploying token contracts on the Ethereum network.

Ether is the cryptocurrency that facilitates transactions on the Ethereum network— Ether does not conform to the ERC-20 standard. Users are required to use Wrapped Ether (wETH) to gain programmable powers found in standards like ERC-20. There are a few common token standards.

Ethereum Token Standards

  • ERC-20 : Fungible token standard

  • ERC-721 : Non-Fungible token standard (1/1 or Single issuance)

  • ERC-1155 : Non-Fungible token standard (<1 or Multi issuance)

At this time, there are limited use cases for tokens deployed on blockchains and the majority of use cases are speculative in nature and need to be understood.

Token Use Cases

  • Paying network fees

  • Collateral

  • Subsidies

  • Governance

  • Infrastructure incentives (Data hosting in exchange for tokens)

The most common use case for a token deployed on a blockchain is governance. Although, there are many notable use cases for tokens that don't revolve around governing procedures.

Using a token to generate another token via a time schedule are important and clear use cases for some cryptos. Although, we don't need a crypto for everything, with critical thinking, there are many things made better through the use of cryptocurrency.

Crypto Use Cases

  • Clear payment

  • Faster settlement

  • Efficient transactions

  • Trust-less transactions

  • Freedom of expression

  • Inclusion

  • Financial exchanges

  • Record keeping

  • IP disputes

  • Property claims

  • Perpetual agreements

  • Autonomous enforcement

  • Distributed Storage

  • Secure Communications

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