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Сryptocurrencies: a new word in the e-commerce

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The virtual platforms, providing new possibilities for business dealing were formed in the end of 20th - the beginning of 21st century with development of the Internet and digital technologies. Naturally it has led to necessity of digital currency. Initially emoney were alternative currency.

At the early stages for advancement of new money and increase of trust from the consumers they were sometimes ensured with precious metals. Nowadays a rate is often floating, and money is not always ensured with national currencies. Nevertheless, they are used for purchases of the real goods and services.

At the present time the following formulation is considered to be standard:

The digital currency is a certain means of exchange accepted in some spheres, but thus not having any attributes of "real money". One of the disadvantages of this is that virtual money has no official status of lawful payment means in any jurisdiction.

 

History of cryptocurrency

It was necessaryy to develop new mechanisms in order to increase the reliability of virtual currency and also to increase its independence from "real money" or any processes in economy. It was an incentive to cryptocurrency, i.e. currencies, whose account and issue are based on various cryptographic methods.

The payment system Bitcoin founded in 2009 became the pioneer in this case. Its founder was Satosi Nakamato. However it is still unknown, whether it is a real person or a pseudonym for the group of developers. Feature of this currency is the fact, that it has no certain centre, i.e. issue is carried out not by the Central Bank or a business concern having headquarters and data-centres. The problems on working capacity maintaining and the control of transactions are distributed between all participants, owning this currency and having installed special wallets-programs.

Later on the other payment systems adopted similar ideas, which resulted in occurrence of several new cryptocurrencies. They use system proof-of-work (the scheme of the proof of work performance) and hashing on various technologies.

Some years later when the given payment systems have proved their competence, they began to gain popularity.

 

Main types of cryptocurrencies

Actually these types of digital money became quite widespread. Nowadays there are more than ten various payment systems, besides, there are such systems, which have already disappeared due to various reasons.

The most popular are the following types:

· Bitcoin (BTC);

· Litecoin (LTC);

· Namecoin (NMC);

· PPCoin (PPC).

Bitcoin is not only the most well known from them, but also the most stable and developed system. But other "currencies" also are popular. They differ with various features from the each other - speed of coins generation, blocks complexity, enciphering algorithms etc.

The recently appeared are:

· Terracoin (TRC);

· Freicoin (FRC).

Basically they use mainly the same principles, as the ancestor - Bitcoin.

Besides there are almost fifteen systems which were recognised as dead or dying. There is no need to speak about them. For some reasons they simply failed to become popular.

 

Main features

All listed the above currencies have some general features. First of all the use of certain cryptographic methods allows to supervise issue and account. Thanks to it the rate does not depend on cost of some real currency directly anymore.

The other key feature is absence of the uniform centre. The functioning occurs in the distributed computer network. In other words it is similar to the operation of torrent-networks.

The information on all operations is located in the special blocks, whose authenticity is proved by all participants. Because of it there is no possibility to cancel payments. On the other hand means cannot be blocked or illegally withdrawn. The probability of swindle decreases considerably.

At transactions a certain anonymity is observed: all information is accessible for public (as blocks are proven by all participants), but it is impossible to track communication with the certain person. In some payment systems there are additional means of safety increase and anonymity. The others systems don't have such means; therefore it is possible to identify the personality of the user, having some additional information.

If to consider Bitcoin system as a basis for all the others, then the functioning occurs as follows:

· All data are stored in special blocks;

· New coins appear in identical intervals. Therefore you can always know precisely, how much money is available.

· For that interval within several minutes the block is filled, sealed and checked on authenticity, supplementing the existing chain;

· The user who managed to generate the block, receives a bonus in the form of new coins.

Coins can be used in Internet shops or in special exchangers, where one can get real money for them.

 

Main markets

Formation of the new markets remains as the main problem, because universality of any currency is defined by sphere of its use. Now there are some large platforms where users can exchange cryptocurrencies for other real or virtual money.

There are some platforms focused exclusively on Bitcoin - Mt. Gox and BitStamp. Also there are such platforms which work with various kinds of cryptocurrencies - Vircurex, Mcxnow, Cryptsy, BTC-e.com etc.

This currency is actively used in Tor network. There were several cases, when illegal trading operations for sale of drugs, weapon etc. were paid by it. However, the official sphere of use is also quite wide. There are some large services, Internet shops and exchangers which allow to purchase goods and to pay for various services with it.


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