“What the heck is Cryptocurrency?”
That’s the first thought that came to my mind when I was offered to join The Token Post. It was also my first question I asked on my first day of work to make sure I fully understood the job that was required of me. Fortunately, I have people here to ask that are a wealth of knowledge in the subject. Here’s the breakdown of the response that I received, today I will focus on the blockchain.
“Asking this question is good because it raises many questions on what is currency and what is money and what is value. Its like to think, ‘wait, if people are paying in cryptocurrency or are holding only cryptocurrency, then what is the money in the bank and what is the currency of countries?’ (Thank you for further confusing me!) Gold is a mineral that has value; dollars are papers that have value. Essentially the 1st currency you’ll see in history is people holding a ledger keeping track of who owes what to whom, so in a sense it’s a way of storing that. If I did a favor to somebody or gave somebody something, for example if I gave them apples in the spring, I would expect them to help me later on or to give me something in exchange when I need it or in a different season. But people don’t have good memories so they started writing it down, and actually this writing down is what’s considered the beginning of history. People say that currency is the transition from prehistory to history so it was just simplifying currency into a ledger. So, there were trusted people that had a ledger, now we call them banks, but this is the ledger. Right now cryptocurrency, Bitcoin in particular, says let’s have nobody hold that ledger. Let’s have that ledger shared between everybody in a way that you would have a peer-to-peer program, such as a file-sharing program, where everybody has this software and they share things amongst themselves. Let’s share currency in the same way. But how do you make it safe? How do you make it so nobody can change whatever they want? Let’s say that if I owed somebody something and I just leave it then it’s protected through cryptography. There’s a system that’s protecting the values. That means that if I spend currency only I can spend it through my passwords and through my keys, and nobody else can do it. That’s the power of cryptocurrency. So we got that ledger which holds who owes what to whom and is protected with cryptography. And that’s the first principle cryptocurrency.”