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What is Cryptocurrency?
talessi@ariesfoundation.org
You Can't Help But Hear The Hype on Bitcoin
It is very difficult today not to have heard of Bitcoin. And by now you've probably seen the hype it has had over the last few weeks reaching all-time highs, and then boom! it starts dropping and loses $1,000s of dollars within minutes, only to have it rebound right back and start hitting a new all-time high a few days later. Approximately 10 years ago 10,000 bitcoins were used to buy 2 pizzas...Now one coin is worth over $60,000!
But what is Bitcoin really? It is a new form of currency known as cryptocurrency or crypto for short, however it's not like everyday paper money that were used too. It is a form of digital currency invented by a mysterious person known as Satoshi Nakamoto. The goal was to create a peer-to-peer system for online payments (peer-to-peer means that it's decentralized and works independent of any financial institution) Think of it like this - when you go into a coffee shop to buy a latte with your bank card, you don't actually give any money to the cafe owner the bank does. When you use digital currency there's no banks, no entities, or governments that control it, eliminating the need for a middleman.
So where do Bitcoin and other Cryptos come from? They are mined, but not in a traditional sense as you might be thinking with a pickaxe underground, instead they are done with computing complex mathematical equations. Once the equations are solved then new bitcoins are generated or mined. The term mining is commonly used because like our mineral resources, there's only a limited number of bitcoins out there, in the case of Bitcoin that number is around 19 million .
But there's more - see miners don't just generate new bitcoins, they use their computers to verify transactions and prevent fraud. It is done 24 hours a day, every day! By collecting all transactions made during a set period into a list called the block, it's the miners job to confirm those transactions and write them into a general ledger. This ledger kind of resembles a huge, giant, universally accessible spreadsheet, so instead of one person controlling everything, there are thousands of computers around the world connected to a network. These computers then all come to an agreement on which transactions are actually valid.
So how does it do all this? By using something called blockchain. Think of it like this, if bitcoin is email then blockchain is the Internet. iI's a whole ecosystem, but taht is a blog for anopther day. The other important consideration is that mining Bitcoin is very costly. You have to factor in the hardware components and the power needed to run that equipment, which would make it almost impossible for an individual to try mining Bitcoinwith any real success. What you have innstead are Bitcoin farms around the world that are dedicated to mining, processing, and verifying transactions.
An individual can invest in a farm and get a small percentage of the returns. Alternatively Bitcoin can be traded on some exchanges or marketplace where you may buy or sell your crypto in exchange for regular currencies.
Do you think Bitcoin is going to revolutionize how we use and think about money, or is it all just hype?
Join us on April 15 for our next THINK With A DRINK
as we dive into all your questions about Cryptocurrencies and other Alternative Investments. Register here: https://us02web.zoom.us/meeting/register/tZcpdOqgrz0qGNHiO5h_O3DHaLtrvYyzdJci
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