Dear reader, if you have come this far it is because you are interested in knowing what Cryptocurrencies are and I would dare to say that you have ever heard the word Bitcoin.
In recent times, Bitcoin has gone from being something that hardly anyone knows to being a revolutionary currency that has drastically changed our way of thinking about the concept of money. We can say that bitcoin is the flagship of Cryptocurrencies.
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What is a cryptocurrency
A cryptocurrency is any digital currency that is considered secure because of the cryptography. Their main characteristic is that they are not controlled by central authorities.
The concept of decentralization of cryptocurrency is to allow the market to have control, while with centralization central banks have control so they can manipulate the value of traditional coins at their own discretion by printing more money.
Criptomedas such as Bitcoin, Litecoin or Ethereum have been very popular since 2017. This popularity is mainly due to the large exposure in media, social networks and the Internet. As people acquire financial literacy, the acceptance of cryptocurrencies increases.
I remember a few years ago people were very skeptical about Bitcoin and its technology. There were two main reasons for this mistrust:
- The own ignorance of the time about the meaning of the cryptocurrency.
- The perception that Bitcoin was a means of payment exclusive to hackers in DarkWeb and the black market.
There are approximately more than 1,500 digital coins although most of us have only heard of Bitcoin. Some such as Ethereum, Litecoin and Ripple have made improvements which have allowed them to have a very good reputation, although they have not acquired the importance of Bitcoin.
Important terminology
In this article I may have used some terms that you don’t know, so before going into the subject I think it’s interesting to define them:
Blockchain
The Blockchain is a public record that exists only in the digital world and that stores all the cryptocurrency transactions that have taken place. Blockchain is not stored on a single computer but uses the peer-to-peer method to distribute information to all users. You have more information about blockchain in this article.
Peer-to-peer
Peer-to-peer or P2P is a method of exchanging data between two or more users. Its main feature is that it establishes a direct connection between computers connected to the Internet without the use of an intermediary service.
Bitcoin Mining
Bitcoin mining is a process through which transactions are processed, network security is guaranteed and synchronization of the members of the peer-to-peer network is achieved through the computational capacity of the computers connected to the network. Bitcoin mining offers a reward in the form of Bitcoins to the miners in exchange for their services.
Origin of the cryptocurrencies
The financial crisis of 2008 devalued the dollar and the euro. Difficulties in the financial system affected the whole world. In the face of the terrible economic crisis, governments around the world decided to implement what is called quantitative flexibility , which consists of printing more money in order to inject cash into their economies. The aim was to provide citizens with the necessary funds to avoid another Great Depression.
Surely what I’m telling you sounds familiar, governments rescued the banks when they were on the verge of collapse due to the low value of the currency and the cut in interest rates. The rescue of the banks was carried out with taxpayers’ money which caused the existing money supply to decrease even more. What lesson did we learn from all this? That central banks manipulate and devalue currencies around the world.
During this time of economic instability an individual named Satoshi Nakamoto became known…
Who is Satoshi Nakamoto?
The story of Satoshi Nakamoto is the story of Bitcoin.
Satoshi Nakamoto, seeing the effects of the financial crisis, decided to intervene with something new that could change the way we think about money. In 2008 he published an article about Bitcoin’s technology, in which he described in detail the system peer-to-peer that executes Bitcoin’s transactions and months later provided the necessary software to carry out these transactions.
In short, Satoshi Nakamoto’s response was the creation of a completely decentralized currency available to everyone. A coin that no central bank can control or manipulate, a totally independent coin.
Decentralization means that we are all part of Bitcoin and the driving force behind it. In the world of Bitcoin, there is no government, bank or intermediary that controls or manipulates its value because Bitcoin belongs to all who use it.
Is Bitcoin a coin?
Bitcoin is a form of payment and a way to transfer funds. You can use bitcoin to make purchases or send funds, it is also possible to convert bitcoin into euros, dollars or any other currency, but bitcoin is not backed by any institution. The importance of Bitcoin depends on how many people use it.
One of the reasons Bitcoin is the leading digital currency is because it implemented the first blockchain in history. The widespread interest in this technology made Bitcoin have the largest number of users and developers to build the system on which it is based.
