Cryptocurrencies are digital assets that are used as virtual currencies and do not exist in any physical form. They are secured by cryptography, that is, encryption. In this way, for example; the act of “double spending”, which means counterfeiting or making multiple transactions with the same cryptocurrency, has become almost impossible.
The world’s first cryptocurrency is Bitcoin, which was created in 2008. Bitcoin has been followed by other types of cryptocurrencies with a variety of hundreds today. Unlike currencies in the classical sense, cryptocurrencies are not issued by a central authority. This feature is perhaps the most attractive aspect of crypto coins for investors. Because in this way, a large part of the crypto coins are exempt from government regulations or manipulations.
What determines whether an investment vehicle is cryptocurrency or not?
The concept of crypto money has actually been in our lives for many years. For example, we used cryptocurrencies instead of physical banknotes in every transaction we made with bank cards, virtual cards or over the internet. The transactions were made on digital foundations without physically transferring money between banks. Therefore, from a point of view, crypto coins were also used in these transactions. Because as a result of these transactions, only numerical changes were taking place in the financial systems. The new generation of crypto coins is primarily distinguished from their ancestors by their lack of physical existence as well as being used in digital transactions. It also differs from past versions in that they are not subject to the rules of a state or organization, as we mentioned above, and that transactions are carried out in the consensus of all units involved in the system. The main reason why it is so popular and loved compared to other currencies in the world is that it has a distributed structure. As such, transactions are carried out not under the control of a single authority, but through the control and approval of all users. This feature makes this currency more secure.
How are cryptocurrencies created?
Cryptocurrencies are created through a process called mining. Individuals with specialized hardware are rewarded by a network with tokens or cryptocurrencies such as Bitcoin for the services they provide. In this decentralized competitive process, if too many people try to mine a coin, it will become increasingly difficult to make a profit with each new addition to the network. This is one of the main reasons why Bitcoin, which can be produced with limits, has increased in value with its increasing popularity over time.
What is Bitcoin and what makes it valuable?
Bitcoin, as we touched on in our two previous articles on the subject, is the first cryptocurrency to fall under the definition we gave above. What distinguishes it from other cryptocurrencies and makes us accept Bitcoin as a form of ‘money’ today is that it can be used in the market instead of physical money. Today, although there are not yet many of them, alternatives to large firms in the service sector, such as Airbnb’s European competitor 9flats.com or airBaltic, which is not known airline but wants to grow, have been accepting Bitcoin in their transactions for a long time. In fact, since the value of Bitcoin is predicted to increase in the future, it is joked that “if not for today, you can say ‘I have made the most expensive holiday’ in the future” for those who shop with these companies.
The use of Bitcoin and the following cryptocurrencies gives the user the most sought-after feature in the financial world, that is, the sense of trust. As a result of this sense of trust, it is highly likely that it will be accepted by banks, merchants, institutions and individuals over time and will be able to be used in all areas without transaction discrimination. Therefore, the faster and more widely cryptocurrencies become a valid payment method, the more valuable they will be perceived.