What is cryptocurrency?
Cryptocurrency, cryptomining. We hear these terms thrown around a lot these days. It’s a new way to invest. It’s a new way to pay. It’s a new way to be deeply confused. To many of us, crypto-things sound like technobabble from sci fi movie. If you’re used to thinking about money as something that is issued by your government, kept in a bank and then traded for goods and services, then wrapping your head around cryptocurrency might be a bit of work, but we can do it!
In the simplest of terms, cryptocurrency is decentralized, encrypted digital money that can be passed from person to person online. They don’t need to provide any personal information to make a transaction, but the transactions must take place on a network they can trust. Cryptocurrency doesn’t pass through or stay in a bank, nor is it governed by any given country.
Cryptocurrency transactions work on a shared database called a blockchain. This blockchain is shared across thousands of powerful computer systems called nodes. Each new cryptocurrency transaction is verified by a node after solving a cryptologic puzzle. The solved puzzle is evaluated by all the nodes in the system, and if more than half of the nodes in the system agree that the transaction is valid, it is added to the blockchain. The digital money transfers owners, and once transactions are added to the blockchain they can’t be changed or deleted.
A traditional currency might be based, in part, on how much gold a country has in reserve, however a cryptocurrency is based on how much computational power a miner can apply to being added to a blockchain.
You can get cryptocurrency in several ways. You could get it through a transaction, which is to say that someone pays you in cryptocurrency. You can also purchase it. Or, you can earn it through “mining”. Like real world mining companies have to put resources (like machinery and labour) into mining for gold or diamonds, you have to do the same when mining for cryptocurrency. And though it may sound simple — solve a puzzle with your computer, get rewarded with cryptocurrency — cryptomining takes a significant amount of computing power and electricity, both of which cost regular money.
Some unethical cryptominers are taking advantage of the ability of web browsers to run code. They deploy scripts on web pages to make a quick buck by stealing computing power and energy from your computer. These scripts work in the background to use the computational resources of visitors to that site. Simply put, they run energy-sucking operations on your web browser without your knowledge or consent. Not all cryptomining scripts are shady. If you give your consent for a cryptominer to use your system to mine, that’s between you and the cryptominer.
If all of that has your head spinning, know that even if you don’t understand how cryptocurrencies work, you can block cryptominers from using your system without consent when you use Firefox.