With the rise of Bitcoin and an ever-growing amount of alternative cryptocurrencies, more and more people are seeking to invest in digital currency. Despite the fact that cryptocurrency has been around for nearly a decade now, most people still struggle to understand exactly what it is.
Let’s start by taking a look at where cryptocurrency originally came from and what gives it value in the first place.
The Origins of Cryptocurrency
The idea to utilize cryptographic principles as the basis for developing a form of currency was initially devised by computer scientist Wei Dai in 1998.
However, this idea remained merely an abstract concept until 2009 when Satoshi Nakamoto (anonymous) chose to take this theoretical model and put it into practice with the creation of Bitcoin, considered by many to be both the greatest invention in computer science since internet itself while simultaneously being one of the greatest scams ever committed.
While it’s true that there are no physical “coins” with cryptocurrency, that doesn’t mean that it isn’t a real form of currency. In its essence, money is defined as a widely accepted means of exchanging value between two parties.
With this definition in mind, consider the fact that cryptocurrencies have risen from being worth fractions of a cent to being worth thousands of dollars per coin within just a few short years. Most people don’t argue about whether or not something with so much perceived value can be considered a form of money – and neither should you.
The first documented purchase using Bitcoin as payment was for two pizzas ordered by Jercos in 2010. At today’s exchange rate those two pizzas would cost over $12 million.
Before we go any further it’s important that you have a basic understanding of what cryptocurrency is. To put it simply, cryptocurrency is essentially just electronic money, with the primary difference being that there are no physical coins involved.
Instead, it uses something known as cryptography to provide a secure and anonymous means of transferring value directly between two parties without the need for an intermediary (banks, credit cards, etc.). These transactions are stored in something called the blockchain, which acts like an online public ledger where funds can be tracked in real time within seconds at nearly zero cost.
Crypto news indicates that the development of Bitcoin has opened avenues for innovation with Bitcoin’s underlying blockchain technology entering the spotlight. One such avenue is the concept of “smart contracts” which allow for automatic agreements between parties without third-party intervention. This allows for numerous potential uses outside of finance which could revolutionize how we conduct business exchanging goods and services online.