Bitcoin as a proud representative in the presence of a colossal unit amount, and the other digital currencies that get carried away daily, there is enough to crystallize attention around the subject. But, beyond speculation and sometimes sensational media headlines, what are Bitcoin, Ethereum and other Litecoin really?
Before embarking on a fairly detailed explanation of cryptocurrencies, we offer you in the few lines that follow a summary, so that you can get an initial idea without necessarily delving into the full article.
To understand cryptocurrencies, it is essential to understand the concept of blockchain. Under this obscure term hides a functioning in fact quite simple. The blockchain is a kind of gigantic digital account book. This account book is heavily secured. So, every time someone wants to consult a transaction it contains, it must be decrypted, which requires electrical and computer resources.
Decentralization requires, it is the users who are called upon to validate the transactions. They are called “miners”. But any work deserving of salary, these users had to be paid. This is the reason why Bitcoin was created. Miners are therefore paid in Bitcoins for the work they do, that is to say, the decryption of the blockchain. For more information read more.
Obviously, this explanation barely touches the subject. If you want to deepen it a bit, the lines below will give you more details about what the phenomenon is.
Where Cryptocurrencies Come From?
Impossible to talk about cryptocurrencies without mentioning their starting point. Everything started in 2008 from a certain Satoshi Nakamoto, whose real identity is still unknown, so much so that we do not know if it is a person or an entire corporation. The fact remains that this good Satoshi gave us a scientific and technical document of almost 10 pages, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
A complicated reading if there is one for those who are not really versed in somewhat technical digital practices, but which presents and describes the operating principle of the blockchain. A bad word which is not really one, because it is on this famous blockchain that we now hear in all sauces that are based on a large number of current cryptocurrencies.
The idea of cryptocurrencies is to be able to serve decentralized applications. That is, applications that do not depend on a third party that will govern operations and other transactions. It is sort of a new model for creating, funding and operating software services, but decentralized – a very important word in the concept of cryptocurrencies.
Besides Satoshi Nakamoto, the ideology also goes back to the existence of crypto-anarchists who, like anarchists, seek to get rid of existing authority and rules, but online. Because as is often reminded by a certain number of specialists in the field. Such as Adam Back or Charlie Lee, that decentralized applications often remain much less efficient than their centralized counterparts, with a third party that governs their rules and operation.
The decentralization of applications and therefore the emergence of cryptocurrencies mainly serve one thing that others cannot offer: resistance to censorship, but also data encryption. Some cryptocurrencies even promise total anonymity.
So many characteristics that turn out to be more interesting put into perspective with events that may have challenged a section of the population. One thinks of the Snowden affair, which highlighted the surveillance of the United States over its population or even over communications throughout the world.
Some online platforms that could use Bitcoin as payment are also starting to backtrack from the volatility of value, which is the case with the video game distribution service Steam, for example.
If the use ultimately remains that of a niche, one element has made the phenomenon extremely media-friendly. This is of course the current speculation around the price of different cryptocurrencies. Although volatile, cryptocurrencies remain a long-term investment, which essentially depends on the change in uses and practices.
The fact remains that it is a market that currently weighs $ 525 billion at the time of writing. Which has something to generate an undeniable interest for the general public, lovers of speculation, or the world of finance as a whole?