What is Cryptocurrency?
Cryptocurrencies we know are Euro, Dollar, etc. like a monetary system. But unlike these currencies, the purpose of creating crypto money is to exchange digital information with a transaction made possible by certain cryptography principles. The use of cryptography is to secure money transactions and control the creation of new coins. The first cryptocurrency was Bitcoin, which was found in 2009. Hundreds of different cryptocurrencies are used today, and they are often referred to as "alternative cryptocurrencies".
In other words, crypto is like an electrical current that has been converted into lines of code with monetary value. To put it even more simply, cryptocurrency is a digital currency.
Unlike central banks, where governments determine the value of the currency, no government has control over cryptocurrencies. Because there is no center that provides control of this money.
The first cryptocurrency was Bitcoin, invented in 2009 by a pseudonymous software developer, Satoshi Nakamoto. Bitcoin uses POW as a system.
After Bitcoin, the first altcoin, Namecoin, was created in April 2011 with the aim of making internet censorship harder via a decentralized DNS. In October 2011, Litecoin, the first successful cryptocurrency using Scrypt instead of SHA-256 as the encryption method, was launched. Thanks to this feature, people can mine Litecoins without special equipment such as ASIC machines used for Bitcoin mining.
In late 2013, Litecoin gained media recognition and reached a market cap of $1 billion. Founded in 2011, Ripple is built on the same protocols as Bitcoin.
The security of Cryptocurrencies consists of two parts: the first is to find tight hash intersections, a job done by miners; Second, and more likely, a miner with more than 51% mining power of the network can modify the global blockchain system and create an alternative ledger, a so-called "51% attack". Even at this point, what the attacker can do is limited. It can undo its own money transactions or block other money transactions.
Cryptocurrencies are also less likely to be seized by the government. All Cryptocurrencies are anonymous in view. And some units have created new systems to ensure complete anonymity.
Hash in Cryptocurrency
Cryptocurrency mining power is measured in hashes per second. A hardware of 1 kH/s digs 1,000 hashes per second. 1 MH/s means one million hashes per second and 1 GH/s means one billion hashes per second. When miners successfully solve a block, a new hash is generated. The hash algorithm converts this large amount of data into a fixed-length hash. If you are familiar with the codes and know the algorithm, you can parse this hash and extract the data in it. But in the eyes of an ordinary person, these hashes look like compressed numbers and are almost impossible to decipher.
SHA VS SCRYPT
While Bitcoin and many other cryptocurrencies are mined using SHA-256, Litecoin and others use Scrypt. These are the largest hash functions, but there are also functions used by some cryptocurrencies such as scrypt-N, x11.
Other hash functions were found to solve the problems posed by SHA-256. Previously, people were able to mine Bitcoin with a GPU, and this was a lot of energy. As Bitcoin became more popular day by day, the ASIC SHA-256 machine was found and the GPU mining method was put to the test.
To give you an idea of how powerful these machines are: A hardware digging with 4 GPUs captures a hash rate of about 3.4 MH/s and consumes 3600 kW/h, while an ASIC machine digs 6 TH/s and consumes 2200 kW/h. So the GPU digging method became obsolete, but some people were worried about the security of the network. With fewer people profitably mining with their home computers, the network has lost some of its decentralization. Scrypt mining was implemented with the promise of ASIC's memory resilience.
Scrypt hashes require quite a bit of memory. While GPUs are already designed to handle this situation, ASIC machines are not designed that way. But Scrypt mining requires a lot of energy and scrypt-ASIC machines have been produced to deal with this problem. At this stage Litecoin considered changing the POW system to avoid ASIC mining. Scrypt considered the POW system to be more efficient than SHA-256. In Bitcoin, 1 block is solved in 10 minutes, while in Litecoin, 1 block is solved in 2.5 minutes.
Helpful Resource: KoinBulteni