This describes a currency for making cryptographic payments on the blockchain. The word ‘’crypto’’ is derived from cryptography, which is being used for security to prevent counterfeiting and fraudulent transactions.
Glossary Term used in a sentence
‘’So, to be clear, the only thing that makes cryptocurrency valuable is the belief that it is valuable by others… Is that all there is to it?’’. In short, yes. And this belief is being backed by utility. For example, trust; each transaction is verified on the blockchain. Another function could be cutting out a middleman; in DeFi. Entertainment purposes are also a potential value creator, for example Gaming NFTs and Music NFTs.
‘’Although Bitcoin was the first widely utilized cryptocurrency, few people are aware that it is not the only one available.’’. There are a lot of different crypto currencies!
‘’So, what’s stopping someone from inventing their own cryptocurrency and completely deflating the market?’’. Everybody can issue a cryptocurrency. However, the currency must provide value in order to sustain a good price. If very few people use the coin and it does not provide value, the price will also be low.
Brief history of cryptocurrency
There were multiple attempts to create a digital currency via the internet even before the 21st century even began. David Chaum, an American, invented eCash, a sort of anonymous electronic money, in 1990. Chaum’s approach, however, was still reliant on existing infrastructure from governments and credit card firms, hence the concept failed. Bit gold, RPOW, and b-money, all of which were launched around the same time, failed to gain traction.
Satoshi Nakamoto wrote a paper in 2008 explaining his concept for a new digital money known as bitcoin. Nakamoto was quickly shown to be a pseudonym, and his genuine identity remains unknown to this day. His ideas, however, were no less influential as a result. He invented the blockchain system for bitcoin, which allowed the currency’s data to be recorded without the intervention of a central authority.
The credit crisis in 2008 was at its peak when Nakamoto’s paper was published. Governments, banks, and stock exchanges were all in financial turmoil, which lowered public trust in these institutions. The emergence of bitcoin was aided by this. The notion of bitcoins gradually expanded after Nakamoto introduced the first bitcoin in January 2009.
After a year, the first bitcoin transaction occurred, with a Florida resident exchanging 10,000 bitcoins for two pizzas.
Bitcoin, as well as the concept of a decentralized digital currency, grew in popularity. As a result, additional crypto-currencies began to emerge. A vast spectrum of digital currencies with widely different values emerged. This ushered in a new era of digital financial transactions.
The crypto currencies also attracted the attention of economists, academics, CEOs. Their descriptions of them ranged from ‘’the currency of the future’’, to ‘’vulgar scams’’. Whatever opinion one might have, it is clear that crypto currencies have made us look at money in a new way.