Introduction on Cryptocurrency
First blogpost. Instead of the usual introduction, I will go straight to the point of summarizing the explanation of “What is Crytocurrency/BlockChain?”
So, many people like me who are not very tech savvy (As I have an accounting back ground) are not very sure what crytocurrency is all about. Isn’t it just a form of digital currency? Like what you have in your Internet Banking account?
Well. It mostly is like the digital currency in your Ibank account. However, this technology has some fundamental differences as compared to the the digital currency in your Ibank accounr. Let me give a rough background how did this whole technology come about (To my knowledge that is). I will break it into simple points as such:
The currency we know today (Your USD, EUR, GBP,SGD) are all known as fiat currency. This means that the currency only has value as it was DECLARED by the government to have value. This was different to as in the past when currency was actually stuff consisting of seashells, gold coin, etc… The complete existence of fiat currency came to live for the United States left the Gold Standard in 1971, when the USD was then no longer backed by Gold.
Government controls the Supply of Fiat currency by monetary policy. It can simply print money to release into the financial ecosystem, hence raising government debt at the same time inflation. This is the reason why everything become more expensive over time!~
As technology advances, Block Chain tech was created in 2008 by a dude/group of dudes under the moniker Satoshi Nakamoto, resulting in the creation of cryptocurrency. (We will learn about block chain later)
The most famous and the first cryptocurrency would be Bitcoin.
To put it simply, Bitcoin is a currency that the general ledger is kept by computers ALL AROUND THE WORLD. Each of these computers will have the ledgers, and the computers can be owned by the normal, general person on the street. This causes the management of Bitcoin to be DECENTRALIZED. Meaning to say, no one really controls the flow and amount of currency in the world, except that we all know it is increasing at an decreasing rate and that the final amount of Bitcoin in the world will only be 21 million eventually. If the supply of Bitcoin can’t be controlled by the government, it is assumed that Bitcoin is not affected by inflation.
So there you have it. A simple 2 minute introduction to Cryptocurrency and Bitcoin.