NEW YORK — The first and most popular cryptocurrency, bitcoin, launched more than a decade ago.
Despite the evangelizing by and rising profile of some investors, a 2021 poll by Pew Research Center found that just 16% of Americans said they have ever invested in cryptocurrencies.
There now are some cryptocurrencies or tokens that are essentially built on top of other cryptocurrencies – but at the most basic level, all cryptocurrencies refer back to a blockchain.
In the physical world, here’s how mining works: A specialized computer processor runs on electricity and produces an astonishing amount of noise and heat.
Mining has another purpose: In the course of solving the puzzle, the most recent bitcoin transactions – the sending and receiving of the currency – are recorded on the blockchain.
As a kind of check, the system is also designed to increase the difficulty of solving the mathematical puzzle as more computers compete to do so.
An additional feature of the blockchain’s design is that the record of transactions is held on many computers that together form a global network.
China outlawed cryptocurrency trading in September 2021 because of concerns they could weaken control over the financial system and were facilitating crime.
The bitcoin blockchain has not been compromised to date, but the second largest blockchain and cryptocurrency, ethereum, faced a major crisis in 2016 stemming from a software vulnerability.
Cryptocurrency exchanges – where people can trade cryptocurrencies for traditional currencies – have been compromised multiple times, with digital bank robbers clearing out the accounts.
Consumers have few recovery options, whether they’re a victim of a scam or security breach or have simply forgotten their digital wallet’s password.
prosecutors do pursue outright criminal behavior, like false advertising or stealing, but if the value of a new cryptocurrency token plummets and does not recover, that money is lost.
But for most cryptocurrencies, the record of who owns what is publicly visible, forcing criminals to become savvier in order to effectively launder cryptocurrencies obtained through theft, scams or ransomware attacks.
Their values are based on people’s faith in them, as determined by the market.
Others might use a fraction of a bitcoin to, say, get a firecracker pork burrito at New Hampshire’s Taco Beyondo.
One peer-reviewed study calculated that, as of November 2018, bitcoin’s annual electricity consumption was 45.8 terawatt hours, comparable to Hong Kong’s net electricity consumption in 2019, according to the U.S.
Other times, can they find the cheapest energy from renewable sources like hydroelectric dams. It really comes down to location.