What is Cryptocurrency and its Purpose
As the United States Treasury prints more than two trillion dollars in stimulus payouts and is planning on printing more to solve the Coronavirus pandemic, I believe it is time to learn about Cryptocurrency and its possible phaseout of all physical currencies. In order to keep this article short and sweet, I will be only talking about Bitcoin, but there are many other cryptocurrencies like Litecoin and Ethereum, which all have their own advantages and disadvantages. These other cryptocurrencies are known as Alt Coins. Unlike the US dollar, Bitcoin is a decentralized digital currency run by no one and beyond the control of any national government. Meaning that bitcoin doesn’t rely on a central bank to keep its value.
History of Cryptocurrency?
Bitcoin was first created in 2009 by pseudonymous programmer Satoshi Nakamoto. His intention of creating bitcoin was to remove the trust placed in central banks. Nakamoto's true identity is a secret and it is probably for the best. Nakamoto had previously published a 500-word essay where he stated “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
How does it Work?
You might be asking yourself, if there is no physical currency that exists for Bitcoin, who tracks the ownership of a digital coin. To solve this problem, Nakamoto created the blockchain software. This software is responsible for recording and storing information about who owns a Bitcoin on a decentralized ledger which is shared publicly on the internet. Pretty cool to watch thousands of transactions happening every day, here’s the link if you are interested [Blockchain]. This decentralized ledger is run on a large network of millions of computers and verifies the existence of a Bitcoin, making it impossible to hack and prevent people from making their own bitcoins. In general, there isn’t only one computer validating all the Bitcoin in the world, rather there are thousands of computers all over the world validating Bitcoins. Don’t worry, bitcoin’s software encrypts each transaction and the sender/receiver are only identified by a string of random numbers. Traders remain anonymous, but everyone can see that a Bitcoin has moved from one account to the other. What about Bitcoin security? Well, the software itself has about thirty-one thousand lines of code which has been heavily tested through penetration testing.
How do I get it?
If you have the money, the easiest way to get your hands on Bitcoin is to buy it through marketplaces such as Coinbase or even Cash App. In 2019, Bitcoin prices peaked at almost fourteen thousand US dollars, making it a pretty lucrative business if your timing is right. You can also earn Bitcoin through cryptocurrency mining with your own computer, however, it will probably not be worth the energy-bill fee and the time wasted. In order to make a profit mining cryptocurrencies, it is probably best to mine with a multiple computer setup.
How does Cryptocurrency affect today’s modern world?
From being able to buy something online effortlessly and without paying taxes all the way to allowing countries like Venezuela to bypass US sanctions, Bitcoin can be used for anything imaginable. It is for this reason that countries like the United States are heavily trying to regulate cryptocurrencies, while countries such as Russia and China are trying to exploit it to devalue the U.S. dollar.