LONDON, Nov. 5, 2021 /PRNewswire/ — So what exactly is Cryptocurrency?
Doctor Troller
Cryptocurrency has been big news in the past couple of years following massive gains for its investors. The most prolific cryptocurrency in the world is Bitcoin with a current market capitalisation of $1.169 Tn (Nov 2021), (Source https://coinmarketcap.com/ ) to put that in context, that’s around the same as the annual GDP of the whole of Indonesia, which has a population of 273m people. (Source https://worldpopulationreview.com/countries/countries-by-gdp)
Bitcoin was created by Satoshi Nakamoto as a way to circumvent the traditional banking infrastructure following the 2008 financial collapse. It is yet to gain traction as a transactional currency, but it picked up huge mainstream interest in 2017 as an investment opportunity when its value rose from $975.70 in March that year to $20,089 on Dec 17. At that point the whole world took notice and cryptocurrency went from the being the preserve of computer geeks to gaining interest from economists and investment banks.
But what exactly is Cryptocurrency?
OK, it’s definitely quite confusing. In short it is a digital version of money. But there is no bank. It is an asset, but it is not attached to anything physical.
It is intended to work in the same way as money. People can have a digital wallet to store the digital money, it can be used to represent value in the economy, which can be traded with others for goods or services or for fiat currency.
Woah there, what is Fiat currency?
Fiat currency is a government-issued currency – US dollars, GB pounds etc, which hold their value based largely on the market’s confidence in that particular country’s economic strength.
Now here is where the similarities lie. The value of the banknote itself is practically nothing it’s just a bit of paper (or plastic these days), it’s what it represents that gives it value.
The serial numbers of the bank notes are recorded by the physical bank and the number in circulation is known. The same is true of cryptocurrency, they are also recorded as numbers in a ledger, and that ledger shows how much of a cryptocurrency is available and who owns it.
So far so good, but here’s where it gets a bit complicated.
Unlike the traditional banking system, the cryptocurrency ledger – the Blockchain – is decentralised. The blockchain is spread across all the parts of the worldwide computing network, recording transactions in a way that is public and verifiable but belongs to nobody in particular.
Why are there so many cryptocurrencies?
In theory, anyone can create a cryptocurrency; at their heart it’s just software. There is no official organisation that decides what is a cryptocurrency and what isn’t, and after the explosion of Bitcoin’s value in 2017 there was a vast number of new altcoins.
OK, what’s an Altcoin?
An altcoin is basically any cryptocurrency that isn’t Bitcoin, it’s an alternative-coin, geddit? They can be mining-based cryptocurrencies, stablecoins, security tokens and utility tokens.
You’re going too fast again</…….
Source: https://finance.yahoo.com/news/dummies-guide-cryptocurrency-crocs-league-080000616.html