INTRODUCTION TO CRYPTOCURRENCIES
a free mind and a free market are corollaries.
Cryptocurrency is a type of currency which is available in digital form (in constrast with the physical coins and banknotes of the usual currency). However they are still separated in units (virtual coins) and can be used for buying goods or services , exactly like the physical coins.
There are some special advantages of the cryptocurrencies which made them so popular after the launch of the legendary Bitcoin:
1. They allow very fast transactions of even big amounts.
2. They make border-less transfer of ownership easy.
3. The most important : All transactions doesn’t require third trusted parties, like a bank, anymore.
The aforementioned third and most important feature is the reason why Bitcoin and other cryptocurrencies have been victims of a merciless war from the banking system and the governments around the world.
The blockchain technology and the Proof of work model which have been introduced by Satoshi Nakamoto and the legendary Bitcoin made the elites behind the current system to understand that something dangerous is being offered to the world. Something that could possibly degrade their role.
We will give an example for a better understanding about how a cryptocurrency works in order to make our life and transactions easier:
Let’s Say that Mary wish to send $30 to her friend George. Normally, she would have to give the order to her trusted bank to remove $30 from her account and to make this transaction, by sending the amount to George’s account using his banking address (IBAN). Mary’s Bank is removing a fee and the sum of $30 from Mary’s account and is notifying George’s bank in order to update his account by adding extra $30. This is taking effect usually the next working day or even many working days later if the Banks are located in different countries.
In a Cryptocurrency scenario, the blockchain (imagine something like a shared , public and evolving ledger) is keeping information about the balances of each wallet and the history of all transactions. When Mary is sending the desired sum of cryptocurrency worth $30 to George, the blockchain is updated in just a few minutes or even seconds, depending on the used cryptocurrency, with the new balances of their addresses. At the same time, everyone who is using the network of the specific cryptocurrency is keeping a copy of all the information in this type of evolving database, named blockchain.
In the Cryptocurrency scenario, everything is happening almost instantly, the fees are usually next to zero, and there is clarity for all the transactions as everyone can check the validity of a transaction through the blockchain explorer. For people who wish to have privacy in their transactions there are even digital coins which offer this as an option. It is more than obvious that a cryptocurrency network offers great advantages in comparison with the banking system. Advantages that are even more important when we are speaking for transactions between people in different countries. Beyond all these, with a cryptocurrency network you avoid the risk of a financial institution bankruptcy which could lead to a haircut for all the deposits. For example in 2013 Cyprus Banks cut up to 50% the funds of their depositors. So, the most critical opportunity that cryptocurrencies offered to the world is that you no longer have to trust a third party to keep your funds, with all the associated risks.