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    • Weekly Briefing: Post-Brexit immigration policy remains an open question December 6, 2019
      Open Europe's Anthony Egan takes a look at what both major parties have said about immigration and the questions that remain.The post Weekly Briefing: Post-Brexit immigration policy remains an open question appeared first on Open Europe.
    • How do trade agreements affect immigration policy? December 5, 2019
      Open Europe’s Anthony Egan explains how free trade agreements constrain the immigration policies of contracting countries, the unilateral measures governments have at their disposal, and the implications of this for the next UK Government.The post How do trade agreements affect immigration policy? appeared first on Open Europe.
    • Weekly Briefing: Spotlight on trade deals as manifestos published November 28, 2019
      As the general election campaign enters its final two weeks, Open Europe's Dominic Walsh examines the commitments on trade deals in the parties' manifestos.The post Weekly Briefing: Spotlight on trade deals as manifestos published appeared first on Open Europe.
    • What do the parties’ election manifestos say about Brexit? November 26, 2019
      Most of the main UK political parties have now published their manifestos for the general election on 12 December. Open Europe’s Dominic Walsh examines each party’s Brexit policies and the key issues and questions that arise from them.The post What do the parties’ election manifestos say about Brexit? appeared first on Open Europe.
    • What would a ‘No Deal’ after the transition period look like? November 22, 2019
      The Government’s Brexit deal leaves open the possibility of ‘No Deal’ after the transition period. Open Europe’s Dominic Walsh explains how this could come about, and points out that this would be a different type of ‘No Deal’ to one with no Withdrawal Agreement in place.The post What would a ‘No Deal’ after the transition […]
    • Weekly Briefing: Party leaders defend Brexit policies as campaign enters new phase November 21, 2019
      Open Europe's David Shiels looks at each party's Brexit policies as the election campaign moves into a new phase.The post Weekly Briefing: Party leaders defend Brexit policies as campaign enters new phase appeared first on Open Europe.
    • Weekly Briefing: Pro- and anti-Brexit electoral alliances start to take shape November 15, 2019
      Open Europe's Stephen Booth and Anthony Egan explore how the UK party electoral alliances are starting to take shape.The post Weekly Briefing: Pro- and anti-Brexit electoral alliances start to take shape appeared first on Open Europe.
    • There is a case for reforming the long-term EU budget November 13, 2019
      On 21 October, Open Europe's Pieter Cleppe gave evidence to the German Parliament's EU Affairs Committee on the long-term EU budget 2021-2027.The post There is a case for reforming the long-term EU budget appeared first on Open Europe.
    • Weekly Briefing: The key Brexit issues in 2020 November 8, 2019
      Open Europe's Dominic Walsh takes a closer look at some of the key Brexit issues that lie beyond the UK's General Election.The post Weekly Briefing: The key Brexit issues in 2020 appeared first on Open Europe.
    • Weekly Briefing: This is the Brexit General Election November 1, 2019
      Open Europe's David Shiels looks at the positions of the main political parties on Brexit as the UK edges towards a General Election.The post Weekly Briefing: This is the Brexit General Election appeared first on Open Europe.

What is cryptocurrency

What is cryptocurrency:  21st-century unicorn – or the money of the future?

This introduction explains the most important thing about cryptocurrencies. After you‘ve read it, you‘ll know more about it than most other humans.

Today cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.

In 2016, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project.

But beyond the noise and the press releases the overwhelming majority of people – even bankers, consultants, scientists, and developers – have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.

So let‘s walk through the whole story. What are cryptocurrencies?

  • Where did cryptocurrency originate?
  • Why should you learn about cryptocurrency?
  • And what do you need to know about cryptocurrency?

What is cryptocurrency and how cryptocurrencies emerged as a side product of digital cash

Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.

In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“

His goal was to invent something; many people failed to create before digital cash.

After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.

This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you‘ll know more about cryptocurrencies than most people do. So, let‘s try to make it as easy as possible:

To realize digital cash you need a payment network with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a central server who keeps record about the balances.

In a decentralized network, you don‘t have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.

But how can these entities keep a consensus about this records?

If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?

Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.

Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution – the part that made the solution thrilling, fascinating and helped it to roll over the world.

 

 

 

The transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed.

Confirmation is a critical concept in cryptocurrencies. You could say that cryptocurrencies are all about confirmation.

As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.

Only miners can confirm transactions. This is their job in a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.

For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins. Since the miner‘s activity is the single most important part of cryptocurrency-system we should stay for a moment and take a deeper look on it.

What are miners doing?

Principally everybody can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peers and spreads forged transactions. The system would break immediately.

So, Satoshi set the rule that the miners need to invest some work of their computers to qualify for this task. In fact, they have to find a hash – a product of a cryptographic function – that connects the new block with its predecessor. This is called the Proof-of-Work. In Bitcoin, it is based on the SHA 256 Hash algorithm.

 

What is Cryptocurrency

 

You don‘t need to understand details about SHA 256. It‘s only important you know that it can be the basis of a cryptologic puzzle the miners compete to solve. After finding a solution, a miner can build a block and add it to the blockchain. As an incentive, he has the right to add a so-called coinbase transaction that gives him a specific number of Bitcoins. This is the only way to create valid Bitcoins.

Bitcoins can only be created if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a specific amount of cryptocurrency token that can be created in a given amount of time. This is part of the consensus no peer in the network can break.

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