WHAT IS CRYPTOCURRENCY?
Before we explain crypto coins, cryptocurrency, lets explain what the money is. Since ancient times, lots of stuff have been used as money to exchange. For example, thousands of years ago, people were trading chicken with wheat or bread etc. In written history, gold or silver coins have been firstly used. Because of security and not to carry tons of golds, banking system has been established and the banks started to collect those valuable coins and gave ‘banknote’ to people representing their value of coins. In time, while computer technology increases, digital money has been released after metallic money (coin) and paper money (banknote).
Although people do not think about that, money is a philosophical term. Our ancestors put value on some mines such as gold and silver and started to trade with them.
Anything which has those six aspects can be used as money:
- It should be acceptable as a payment form,
- Hard to counterfeit.
Cryptomoney / Cryptocurrency
Shortly, it can be described as digital money. When cryptocurrencies become popular, people will make electronically payments with those. In today’s world, our current money system has lots of problems:
- Outdated credit cards and wire transfer problems,
- Commissioners to make transactions, which makes them expensive and slow,
- About 3 billion people do not have a chance to reach a bank,
- Growing financial inequality,
- Inflation and losing value of money,
Bitcoin, the first cryptocurrency, was born in 2008 after the mortgage crisis. The purpose was to eliminate banks and banking system and create an anonymous system for money transfer. Bitcoin was the only cryptocurrency until 2011. Then, people started to create alternative coins to increase Bitcoin’s aspects such as anonymity, speed, security etc…
Benefit of Crypto Coins, Cryptocurrency
Cryptocurrency system can be better than traditional monetary system that we have now because of its decentralized feature.
No More Extreme Money Printing: The central banks print unlimited money when there is an economic problem, which may lead to devaluation and people lose their money’s value in time. However, most of cryptocurrencies have limited amount and there is no center to release more coins when they are all in circulation. Doing that, the value would be saved.
No More Corruption: Having more power have always been abused by some people in history. However, No one could abuse their power as cryptocurrencies distribute power among people on network. This is the main purpose of blockchain.
No More Commission: In traditional monetary system, making a transfer can be done with a cut to the bank. In cryptomoney system, these cuts are minimal in comparison.
No More Banking: there are still billions of people who cannot reach banks. Cryptocurrency system is a good solution to solve that problem. Anyone can make a transaction by mobile phones as people reach mobile phone more than banks in the world.
Security for Accessing Money Accounts: Banks or governments are able to freeze bank accounts without any reason. For example, In the US, if someone dies without writing a legal will, the government can have his all assets. However, no one can stop people to reach their own cryptocurrency accounts.
Crypto coins are briefly explained here. If you have further questions, please feel free to ask.