How Digital Currencies Work

Digital currencies like bitcoin have grown in popularity for a number of different commercial uses. There popularity is generally due to their traceability, or lack thereof, which is one of their most ingenious functions. So how do they achieve this anonymity? Currencies like bitcoin work through algorithmically distributed and encrypted segments of code, which make the ownership of the currency anonymous.

There are quite a few problems with this technology. These came to a head with bitcoin a couple of years ago, when a criminal organisation managed to steal millions of pounds worth of bitcoin, which, because of the theft, allowed the government to get into the system and see who owned all of the currency, which resulted in a widespread loss of anonymity, causing severe damage to the bitcoin brand.