A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are classified as a subset of digital currencies as well as a subset of also alternative currencies.
- The legal concern of an unregulated global economy
- Loss, theft, and fraud, darknet markets and other legal issues avoidance
- Alternative, decentralized modes of exchange are in the early stages of development
Modifications of the proof-of-work algorithm have been created to address the problem of scaling, such as the way the IOTA ledger works. IOTA uses a simplified Proof-of-work algorithm making use of the directed acyclic graph. A new transaction becomes part of the ledger after its sender does a small amount of proof-of-work. Each network participant is therefore also a miner, however without any economic incentive other than enabling their own transactions. This system scales automatically as it gets used more. The proof-of-stake is a method of securing a cryptocurrency network and achieving distributed consensus through requesting users.
