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    • PM to set out departure plans today May 24, 2019
      Prime Minister Theresa May is expected today to set out her plans to step down as the leader of the Conservative party on the week of 10 June, according to the Financial Times and the BBC. May is due to meet Chairman of the 1922 Committee of Conservative backbenchers, Sir Graham Brady, at 9 am this […]
    • What to watch out for in the EU27 as Europe votes May 24, 2019
      Open Europe's team provides an overview of key questions, actors, issues, and trends to watch out for when observing European Parliament elections in the EU27. The post What to watch out for in the EU27 as Europe votes appeared first on Open Europe.
    • Leader of the House of Commons resigns over PM’s ‘new Brexit deal’ May 23, 2019
      The Leader of the House of Commons, Andrea Leadsom, yesterday resigned from the Government, saying she did not believe that "we will be a truly sovereign United Kingdom through the [Brexit] deal that is now proposed" and that the Prime Minister's 'new Brexit deal' approach "will deliver on the [2016] referendum result." In her resignation letter, […]
    • Divisions in Italian government become more visible ahead of European elections May 23, 2019
      Ahead of European Parliament elections, Open Europe's Anna Nadibaidze explores the recent tensions within the Italian coalition government, both over European and domestic issues. The post Divisions in Italian government become more visible ahead of European elections appeared first on Open Europe.
    • Theresa May: Withdrawal Agreement Bill is a ‘new Brexit deal’ May 22, 2019
      In a speech yesterday, Prime Minister Theresa May announced that the Withdrawal Agreement Bill, which MPs will vote on in June, will represent “a new Brexit deal,” which would make a “ten-point offer to everyone in Parliament who wants to deliver the result of the referendum.” The deal includes a commitment to seek to replace […]
    • The CDU after Merkel and Germany’s future in the EU May 21, 2019
      Appearing on TRT World's The Newsmakers programme on 17 May, Open Europe's Zoe Alipranti discusses the future of the Christian Democratic Union (CDU) party and the role of Germany in the EU. The post The CDU after Merkel and Germany’s future in the EU appeared first on Open Europe.
    • Cohesiveness between Eurosceptic parties is not guaranteed May 21, 2019
      Appearing on Al Jazeera English on 18 May, Open Europe's Anna Nadibaidze discusses the prospects for Eurosceptic parties in the 2019 European Parliamentary elections. The post Cohesiveness between Eurosceptic parties is not guaranteed appeared first on Open Europe.
    • Cabinet to discuss merits of “definitive votes” on Brexit options May 21, 2019
      The Prime Minister, Theresa May, will chair a meeting of the Cabinet this morning, where ministers are expected to consider the merits of holding “definitive votes” on different Brexit outcomes. The Cabinet is also expected to discuss details of the Withdrawal Agreement Bill, and consider whether the Government should accept the Labour Party's demands on […]
    • 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 […]

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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