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    • May promises “new and improved” Brexit Bill next month May 20, 2019
      Prime Minister Theresa May has promised a “new and improved” Withdrawal Agreement Bill for next month, which is to include “proposals for alignment with EU standards on workers’ rights” and environmental protection. Writing for the Sunday Times she said, “When the Withdrawal Agreement Bill comes before MPs, it will represent a new, bold offer to […]
    • Migration dominates the general election in Denmark May 20, 2019
      Denmark is set for a general election on 5 June, and the current Government is estimated to lose its majority to the opposition by a landslide. Open Europe’s Marcus Cadier outlines the Danish political landscape, where the migration issue is as salient as ever. The post Migration dominates the general election in Denmark appeared first […]
    • Prime Minister to agree timetable for leaving office in June May 17, 2019
      The Prime Minister, Theresa May, has agreed to set out a timetable for her departure from office following the Second Reading of the Withdrawal Agreement Bill in June. The announcement was made yesterday by the Chairman of the Conservative Party's backbench 1922 Committee, Sir Graham Brady, following a meeting between May and the Committee's executive. […]
    • How will the UK’s participation in the European Parliament elections affect the EU? May 17, 2019
      The UK’s unexpected participation in the European Parliament elections has already had a significant impact on domestic politics. However, as Open Europe’s Dominic Walsh points out, the election of British MEPs will also have consequences for the EU. The post How will the UK’s participation in the European Parliament elections affect the EU? appeared first […]
    • Brexit Secretary: Withdrawal deal is “dead” if not approved by MPs in June May 16, 2019
      The Brexit Secretary, Stephen Barclay, has said that the Prime Minister’s Brexit deal will be "dead" if the Withdrawal Agreement Bill is not approved by MPs in June. Speaking before the Lords EU select committee, Barclay also said, "There is an under-appreciation that No Deal can still happen," adding, "If the House has not passed […]
    • Open Europe’s Pieter Cleppe discusses level playing field provisions after Brexit May 15, 2019
      Open Europe's Pieter Cleppe gave evidence to the House of Commons Exiting the EU select committee on 15 May. Below is a brief summary of the session.The post Open Europe’s Pieter Cleppe discusses level playing field provisions after Brexit appeared first on Open Europe.
    • Government to bring forward Withdrawal Agreement Bill during first week of June May 15, 2019
      Downing Street announced yesterday that the Government will bring forward the EU Withdrawal Agreement Bill for a vote in the House of Commons during the first week of June. Following talks between Prime Minister Theresa May and Labour Party leader Jeremy Corbyn, a Government spokesman said, "This evening the Prime Minister met the Leader of […]
    • Customs union deal with Labour risks losing Conservative support, senior MPs warn May May 14, 2019
      A group of senior Conservative MPs, including thirteen former Cabinet Ministers, have warned Prime Minister Theresa May that she risks losing the "loyal middle" of the Conservative Party if she agrees a Brexit deal with Labour which would keep the UK in a customs union with the EU. In a letter to May published by The […]
    • New polls show Brexit Party support increasing in European and Westminster elections May 13, 2019
      A new opinion poll for the European elections in the UK on 23 May has put the Brexit Party in first place, outperforming the combined total for the Conservatives and Labour. The Opinium survey for the Observer showed the Brexit party on 34%, with Labour in second place on 21%, the Liberal Democrats in third […]
    • New Briefing: The 2019 European Parliamentary elections and the future of the European project May 13, 2019
      In a new briefing, Open Europe analyses the upcoming 2019 European Parliamentary elections and their potential consequences, both in terms of the general future of the European project and the day-to-day functioning of the EU institutions.The post New Briefing: The 2019 European Parliamentary elections and the future of the European project appeared first on Open […]

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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