What is Crypto? by Danny Blanc

Before getting into any crypto project, the first and foremost question on your mind might be, what exactly is crypto? 

In most people's minds, crypto is this magic internet money in which you can invest your money. And this is true to an extent. You can certainly invest in various cryptocurrencies with the most prominent called bitcoin, which was also the first cryptocurrency in existence.  

Bitcoin was created in 2009 by an unknown party or individuum called Satoshi Nakamoto in response to the financial crisis of 2008 and the bailout of banks on the back of the “little guy”.  

The intent was to create a global, decentralized payments network that can not be manipulated by printing unlimited amounts of money (and therefore stealing value from everybody with savings via inflation) and is not governed by one central institution, hence is censure resistant. Nobody can close your account or take away your money for whatever reason.  

With this vision in mind, Satoshi Nakamoto used blockchain technology to create a marvelous payments network with the most important property of such a network being its decentralization.  

It works with a so-called “distributed ledger”, meaning at any time every participant of the network knows how much bitcoin (or other Cryptocurrencies like for instance Kawakami) everybody in the network owns. When you want to wire some bitcoin to your friend, neighbor, or family member you just create a transaction, and one of the miners “validates” that transaction, thereby updating the entire network with the new balance on your account and all the other accounts. The miner does that by calculating a “block”, which is a bunch of transactions bundled together and encrypted by different encryption algorithms, depending on the cryptocurrency.  

So the miners (computers or farms of computers) are the ones ultimately providing decentralization and security to the network because everybody with a computer can be a miner. Why are these individuals benevolent and validate our sending of Bitcoin or KAWA? Well, they aren’t, because they get rewarded in Bitcoin themselves for their hard work. For every block they validate (and thereby update your Bitcoin or Kawa Balance from your account to your friend or neighbors) they get exactly 6.25 Bitcoin.  

So that’s how it all started. Fast forward 13 years to 2022, and you can find thousands of cryptocurrencies with fast-evolving use cases that far exceed the basic idea of a global payments network. What they all have in common is the vision of decentralization. 

Nowadays the blockchain is used to verify the authenticity of data, show ownership of images (NFTs), build decentralized banks through decentralized finance protocols, and even provide interest to you that far exceeds the interest offered on your savings account. The applications are manyfold with the latest being the Metaverse and Gamefi, where technology companies are trying to build games that actually make it possible for you to earn money by playing one of the games they produce.  

 

TLDR: 

Crypto is magic internet money, decentralized meaning nobody can keep you from using it, no central institution like a state can manipulate it or take away your funds. It is global and independent of any state.  

Can also do another bunch of stuff, like authenticate ownership of images or data, pay you interest through flashy tech protocols or build games in which you can earn money by playing.

Leave a comment

Please note, comments must be approved before they are published