What is a cryptocurrency and what is the cryptocurrency market?
You translate the English cryptocurrency into Dutch with cryptocurrency or cryptocurrency. In the most general sense, digital currencies are also often spoken of. However, almost all currencies are already digital, but not based on cryptography. The word Crypto indicates that this digital money has been developed on the basis of cryptography. Everything is encrypted with established cryptographic principles, algorithmic formulas, protocols and processes. It is literally higher mathematics that makes the existence of cryptocurrency possible without third parties and can be traded on all kinds of different exchanges in different ways. These together create a global motley collection of diverse cryptocurrency markets that continue to develop and move 24/7 every day of the year. Bitcoin – the first of many cryptocurrencies!
The oldest and most well-known cryptocurrency is Bitcoin. This has generated its own network effect and market forces. We can now speak of a Bitcoin cryptocurrency market with a gigantic increase in value because every year more and more capital has entered the Bitcoin economy. This digital cryptocurrency may well be on its way to taking over the role of gold. In the meantime, countless alternative cryptocurrencies have been developed with various properties and together they form the digital cash, the digital cash options for the internet age and each represent its own community and its own developing cryptocurrrency market.
Cryptocurrencies, such as Bitcoin, “live” within peer-to-peer networks and are therefore out of sight and interference of the major banks and governments. So it’s about free money. Healthy money, since the supply is limited and there is no third-party risk still debt associated with it. There is also no longer a third party, such as a bank or government, needed to keep track of and check the transactions in a general ledger. The English word for ledger is ledger. You often come across this word in the crypto world along with another buzzword: blockchain. On this website we mainly use the Dutch terms general ledger and blockchain.
The blockchain was invented in 2008 by the anonymous developer or group of developers known as Satoshi Nakamoto. In 2009, with the publication of Bitcoin, this distributed open ledger was a central element. The blockchain is a general ledger that copies all executed transactions across all participants (nodes) of the network. Maintaining and validating all copies of this ledger is done using a consensus algorithm.
In the case of Bitcoin, it is a consensus algorithm that works on the basis of a proof of work. In this case, there are so-called Bitcoin miners at work who are rewarded for their contribution to control and validate the blockchain. A reward consists, among other things, of a so-called miners fee.
So we are talking about cryptographic gold within a decentralized network of peers (equals). It brings the power of money back to the end users. Everyone is equal within the decentralized cryptocurrency networks. In fact, it is a democratic revolution. In internet land, we call this a disruption. What Uber does with the taxi world, cryptocurrency does with the banking world.
Modern money such as the euro and the dollar relates to fiat money. It is linked to a central power. Large banks led by a Central Bank take a break and manage it. Cryptocurrency has no banks, is therefore a free and independent one. Cryptocurrency therefore has an unprecedented emancipatory power. It enables citizens to carry out all possible transactions among themselves, in complete privacy.
Every financial transaction is a human interaction. The transaction captures a piece of communication. Ideally, this interaction takes place on the basis of freedom, honesty and transparency and with respect for financial privacy. To make this ideal of financial self-determination possible, a healthy money system is needed. Cryptocurrency powered by Bitcoin provide this with their well-designed, unprecedentedly secure cryptographic design and their proven blockchain. We are experiencing a unique moment in the technological history of mankind. Cryptocurrency – Financial Freedom vs. Financial Repression
Our current money system, which operates on the basis of unlimited fractional banking by major commercial banks, is very far from this ideal. For example, the Euro money system is run by commercial interests and does not work to the advantage of its users, the citizens of the Eurozone. It works to the advantage of the wealthy major shareholders and gives central governments more control over the citizens.
As long as only a small group of people own bitcoin and altcoins and not all shops and companies accept the new free money, fiat money remains important. Special crypto exchanges make the connection between the regular money and banking system and the cryptocurrency networks.
This central power does not sleep and also develops central forms of cryptocurrency and blockchains! Vigilance is called for here. Below in the video you can follow a very good conversation between Simon Dixon and Andy Hoffman about Bitcoin and cryptocurrency. Highly recommended to see quietly before we continue:
Let’s go through everything again. Here is a table of contents about the world of cryptocurrencies:
Why and how can I invest in cryptocurrency?