Cryptocurrencies have now entered our daily lives to a large extent. People from all walks of life have a certain knowledge about cryptocurrencies. They can chat and express their opinions on cryptocurrencies in various environments.
However, there are those who do not yet know what crypto money, blockchain, coin, token are. In this two-part article, we will first briefly explain what Cryptocurrency, Bitcoin and Blockchain are. In the second part, we will talk about the superiority of cryptocurrencies, the reason for the rapid appreciation of Bitcoin, and the dangerous aspects of investing in cryptocurrencies with insufficient knowledge. Read that article here.
Cryptocurrencies
The term cryptocurrency, created by combining the words Crypto and currency, means crypto (encrypted) money. Cryptocurrency; It refers to the virtual currency used through the internet, not affiliated with any central authority or intermediary institution.
Cryptocurrencies bear this name because they can only be extracted and used through passwords from virtual wallets where they are placed using certain passwords. With cryptocurrencies, individuals or institutions can spend or accept crypto just as they would with real money.
As of today, there are more than a thousand types of cryptocurrencies in the market. Some of these coins are: Bitcoin. Ethereum, Ripple, Litecoin, Dash, Monero, Neo, Nem. They are virtual only because they are registered in the computer system. In other words, these currencies do not physically exist in printed form, such as the Dollar or the Euro.
Cryptocurrencies do not have a mineral value like precious metals or a government reputation like paper money. Its value lies in the fact that its users accept it as a medium of exchange or as a commodity. Its value is determined by the instantaneous supply and demand conditions in the market, just like in other currencies or commodities.
Bitcoin
Bitcoin was the first to appear and still the most widespread of cryptocurrencies. Bitcoin is limited to 21 million units. As of 13 November 2017, 16,676. There are 850 Bitcoins in circulation. Accordingly, there are 4,323,150 Bitcoins that can still enter circulation. In order for new Bitcoins to circulate, it is necessary to decipher a 16-digit password.
Deciphering this cipher requires highly professional knowledge and technical equipment. The person who cracks the password wins 12.5 Bitcoins. Those who want to make a payment or a transaction using the Bitcoin system, but do not want to deal with the password, can buy it for money from websites that sell Bitcoin. Bitcoin’s rate is determined in the market according to supply and demand, just like the rate of national currencies against each other.
Since 1 Bitcoin is 6,200 USD (23,932 TL) with the exchange rate of 13 November 2017, it means that there is approximately 103.3 billion USD Bitcoin in the market. As of the same date, the total market value of all cryptocurrencies is around 195 billion USD. In order to make a comparison, let us state that the value of all cash in circulation in USD is 31 trillion USD and the amount of USD in circulation in the world is 1.5 trillion USD.
Blockchain
Blockchain; It is a distributed database that provides encrypted transaction tracking. This distributed database, in which each piece of information is recorded in blocks, by connecting to each other with advanced encryption algorithms, provides the opportunity to make transactions without being tied to a center. Blockchain network is a system in which all money transactions are recorded. The most important feature of this system is that it is kept in more than one place, that is, in a whole network, instead of being kept at a single point.
The reason for keeping records in more than one place is to increase the reliability of the recorded information. Even if one of the registry is lost, the information continues to be stored in other registry in the network. The places where the information is saved are in relation with the previous and next block coming from it with a special encryption.
In this case, when information is changed in one of the links that make up the chain, this information becomes incompatible with the previous records. In order for a record to be changed, the change must be approved in several of the links that make up the chain. Information coming out of a place cannot be accessed, managed or directed by anyone until it reaches the other party and the codes match and this information is revealed. It is not correct to associate blockchain technology only with cryptocurrencies. This technology can be used as a high-security system in many areas, especially in areas such as banking.
Next Page: Advantages and dangers of cryptocurrencies
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