What is cryptocurrency and why does it matter?
There are many definitions for cryptocurrencies but let’s use the definition from Cambridge Dictionary: A digital currency produced by a public network, rather than any government, that uses cryptography to make sure payments are sent and received safely.
The conception of cryptocurrency is a very old one. It was first conceived in the early 1980s by the American cryptographer David Chaum, which evolved into “Digicash” in 1989. However, crypto starts to gain wider attention only with the born of Bitcoin in 2009, following up by many coins such as Litecoin, Ether, Dash,…Up to now, there are about 7000 different cryptocurrencies that existed on the market and the total market cap of crypto has hit $2400B in May 2021.
Backed by blockchain technology, cryptocurrencies have some unique characteristics that make them attractable:
- Trust is not needed. Blockchain can remove the need for a middleman and people can send cryptocurrency in a trustless way for the first time in human history.
- Transactions are permissionless, transparent, and inconvertible. People can send and verify their transactions. All records are kept digitally and accessible to everyone.
- Most cryptocurrencies have limited supply which means they can avoid inflation like fiat currencies controlled by central banks. As such, they can appreciate value over time. This is why people start to consider Bitcoin and its brothers as a “store of value”.
Once considered as a toy for tech-savvies, cryptocurrency is now getting huge awareness from all people around the world. However, despite its phenomenal growth, real-life usage of cryptocurrencies is minimal, as they are mainly used for trading and speculating purposes.
Last modified 10mo ago
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