Bitcoin, a peer-to-peer payment system, is the first digital currency to use proof of work mining as its means of operation. This means that miners confirm transactions by consuming huge amounts of computational effort. Under a proof of work system transaction authentication is impossible, so Bitcoin keys are generated through hashing functions which can be used to verify a transaction but cannot be used to reveal any information about the sender or the receiver – only whether it has been verified at all.
How long will cryptocurrency take off?
There is no reason for cryptocurrencies not to become as popular as other payment methods like Visa and Mastercard. Having said that, it’s true that cryptocurrency will never gain 100% adoption in consumer markets because it’s too much hassle to buy anything with cryptocurrencies; if you want to spend even $10 online you need an international bank account and your bank may charge regular monthly fees (in fact platforms like Coinbase and Circle make much more money servicing regular clients than they do taking decades-old investors for almighty commissions). With traditional currencies we don’t have those kinds of problems: we literally choose what currency we wish to use depending on our needs at the time – hotels accept USD regardless if they sell their rooms, maid service charges USD regardless if someone plans on staying at their house for days or for weeks – basically every single vendor accepts somewhere around 10 different currencies roughly. For this reason it makes sense why traditional money takes root and will always win