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What Is Cryptocurrency?

In our game Traphouse you use an in-game cryptocurrency called TrapCoin. So what even is it?

Cryptocurrencies Are Revolutionary

Cryptocurrencies offer security, decentralization, and no need to trust a centralized party to handle money, data, or media. Think about this. Who doesn’t have a Facebook? Facebook is free, everyone has it, and it is so easy to use. Millions of people log in and out of Facebook daily. They post all their pictures, what they like to do, and essentially all aspects of their life. Where do these posts go? All of this information is put on Facebook’s server so now Facebook have access to everything. They can use their AI to make an assessment of you and target you with ads that is the most likely thing you’ll buy. Facebook gets paid every time you click. Should we allow a centralized entity to control and harness all of our data for profit? Is that ethical? Is it okay? Cryptocurrency offers decentralization with Blockchain technology. Now there is no need for any centralized entity in control. This allows the individual to own and protect their data.

Another example of where cryptocurrencies can be used is in video games. Have you ever bought an in-game item to use? This item is stuck inside the game and you have no control over it. It isn’t even technically yours since the developers can take it away at any moment. With cryptocurrency an item can be represented by a token. So if you buy a cool sword with dollars then it will be stored in a token. This token is actually yours and cant be taken away. You can transfer it to your wallet, trade it to your friends, give it away, or sell it to someone else once you don’t need it any more.

Cryptocurrency and Blockchain technology can be used for so many things like file sharing sites, file storing sites, video sharing sites, social media sites, video games, and a range of other things, including a decentralized super computer. One of the most common use of cryptocurrency is as currency, or a form of payment.

How Is it Used As a Form Of Payment?

Cryptocurrency is most commonly an asset or a form of currency like dollars that can be exchanged for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded for the goods or service that the issuer provides. Think of them like arcade tokens or casino chips. You’ll need to exchange dollars for the cryptocurrency token just like casino chips to access the good or service. These cryptocurrencies work using a technology called Blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security and if you have a PC you can contribute to the network and earn a little bit of the currency for yourself over time.

Double Spending Problem

This common technique is a fraudulent spending of the same amount twice. Our traditional solution was a trusted third party a central server that kept records of the balances and transactions. This always required an authority in control of your funds and with all your personal details on hand. In a decentralized network like Bitcoin, every single participant needs to do this job. This is done via the Blockchain, a public ledger of all transaction that ever happened within the network that is available to everyone. Everyone in the network can see every account’s balance. Some coins like Zcash and Monero have a private ledger and cannot be seen by anyone.

How Does It Work?

Every transaction is a file that consists of the sender’s and recipient’s wallet address or public key and the amount of coins transferred. The transaction also needs to be signed by the sender with their private key. Eventually, the transaction is broadcast to the network, but it needs to be confirmed.

Only miners can confirm transactions by solving a cryptographic puzzle. These miners are typically multiple graphic cards running full blast or a specialized machine that is used only for mining. Once the machine solves the cryptographic puzzle they take transactions, mark them as legitimate and spread them across the network. Afterwards, every node of the network adds it to its database. Once the transaction is confirmed it can not be forged, is irreversible, and a miner receives a reward plus the transaction fees.

Essentially, any cryptocurrency network is based on the absolute consensus of all the participants regarding the legitimacy of balances and transactions. If 2 Bitcoin nodes of the network disagree on a single balance then, since it is a Proof-of-work cryptocurrency, the ledger would revert back to the one that has the most work put into it by the miners.

There Is So Much More

Cryptocurrencies are evolving, changing, and being used right now for some amazing technological achievements. We believe that cryptocurrencies are the currencies of the future. This technology will allow for people to actually own their data and digital assets among so many other things. Let us know what you think about cryptocurrencies down below.

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