Hello world my name is Francisco, fcoterroba on the Internet and today I’m bringing you a post where I’m going to try to explain what cryptocurrencies are, what they’re for, how they work and, in summary, try to resolve all the doubts that anyone has when they want to enter this fantastic world.
Bitcoin, Ethereum, IOTA, Ripple. We could keep mentioning the immensity of cryptocurrencies that exist today but probably all this sounds like Chinese to you.
A cryptocurrency, according to Wikipedia:
“It’s a digital medium of exchange that uses strong cryptography to secure transactions, control the creation of additional units and verify the transfer of assets using distributed ledger technologies.”
Are you still the same? Well, in summary, a cryptocurrency is nothing more than a digital currency that uses cryptography to secure and verify transactions.
Roughly, we could say that a cryptocurrency is the same as any conventional currency, see the Euro, the Dollar or the Peso.
Its main difference, or at least the most notable, is that there’s no cryptocurrency on paper. Absolutely everything is done digitally.
But, let’s start from the beginning. It’s undeniable that the boom this type of money has now is thanks to Bitcoin. We must start there.
What is bitcoin?
A bitcoin is nothing more than one of the multiple existing cryptocurrencies (in addition to being a protocol and a P2P network) that was developed in 2009 by an anonymous internet user who called himself Satoshi Nakamoto.
At that time, the value of the currency was only a handful of cents (now we’ll get into why its value has varied so much) but, less than a decade later, it cost more than 10,000€.
How were bitcoins obtained?
Or bitcoines, as we call them here. These can still be obtained today although their profitability isn’t as high as 10 years ago, when it was for almost any user.
Bitcoins and in general, all currencies can be obtained in two ways:
- Buying them on an exchange, making a bank transfer, etc. In short, paying their current value. 💱
- Mining them.
Sorry? Did you say mining?
That’s right. A bitcoin can be mined and, what’s more, anyone can become a Bitcoin miner using specialized software and hardware. Even on your Intel Pentium. (another thing is that it’s worth it 😂)
In bitcoin, unlike the traditional economic system, in which bills can be printed at will (although then we mess it up and Europe has to rescue us). There’s a limited number of coins. 21 million to be exact and new coins are released every 10 minutes.
In summary, a miner receives a mathematical problem every ten minutes. Whoever solves this first, gets the new coins put into circulation.
I’ve heard about “Blockchain” What is it?
A blockchain, or chain of blocks, in Spanish, is a data structure in which the contained information is grouped into sets to which metadata relative to other blocks of the previous chain are added in a timeline so that thanks to cryptographic techniques, the information contained in a block can only be repudiated or edited by modifying all subsequent blocks.
Now, without Wikipedia:
In summary, a blockchain is a large virtual accounting book that’s built by blocks (the mathematical problems we talked about before) that then join, validate and confirm the obtaining of the cryptocurrency.
Okay, everything is very good, but what is it for?
What’s the point of having 30€ in your wallet? What’s the point of those shares the bank gives you when opening your account? What’s the point of having a gold mine in the garage?
Well, after all, everything is speculation. What can I do with 30€? Will my bank shares appreciate? Do I mine the gold that’s next to my Fiat or is it worthless? Well, if this is your situation, tell me and I’ll leave it clean for you 😂
Having, investing or speculating on a cryptocurrency is nothing more than playing the Wolf of Wall Street or feeling like an authentic stockbroker. You can believe more or less, you can have your theory for a currency to be up or down. You can even invest money to lose it or multiply it.
There are 1001 assumptions about cryptocurrencies: Some believe they’ll be the new ways of having money, some only see it as another way to invest their money, etc.
What do you think?
I, personally, think that as long as there isn’t a digital currency that isn’t speculated with, this will only be worth investing or having your pension fund.
Never a currency that costs 300€ at 12:00 and 900€ at 12:30 can be people’s daily life.
Let’s give an example: Let’s take Doc’s time machine 🥼 and go to 2120. Bitcoin becomes the official currency of the Kingdom of Catalonia, the new country. 😂
You’re a 20-year-old person, looking for your first job and they hire you as a waiter. You’re going to earn 100BTC per month. Maybe when they hire you, those 100₿ give you to live alone, eat, go partying and save about 20₿. Because those 100₿ when they hired you, had a value of about 1000€. But, if ₿ loses value, your salary will become about 600€ and you won’t be able to do anything you did last month. Because your salary has lost value, but the rest of things still cost the same. And therefore, maybe at the beginning of the month, a butcher company finds it profitable to put a steak at 3₿ but at the end of the month it’s losing money. Are we going to be setting the values of all products daily?
That’s the main problem of not having a stable currency.
The only cryptocurrency in which I see some future (although only for investment, not to establish it as money in a modern social system) is KaratGold Coin (KBC). It’s a cryptocurrency affiliated with the website Karatbars which is sustained from what for me, is the maximum root of money in the world for many years. Gold.
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With nothing more to add, I say goodbye for today hoping that the topic covered has been interesting to you and you can leave me in the comments what your opinion is! Greetings and see you next time! 😊
sources: Wikipedia, Nobbot.com, Xataka, Academy.bit2me.com, Bitcoin, Buybitcoinworldwide.com, Cointelegraph.com, Rankia.com, Karlheinzniebuhr.github.io, Sucrelaw.com