When it comes to understanding cryptocurrencies, there’s no single source where you can learn all the different technologies combined in an easy-to-understand, non-confusing language. That’s why in this guide you’ll learn all you need to know to never feel confused or embarrassed again when it comes to crypto.
Cryptocurrencies are nothing more than currencies such as the USD dollar or the euro. The difference is that they use an open system that allows everybody to use them freely and securely from anywhere without any requirements while giving you absolute control of your money.
Compared to traditional money where only the governments control the supply, how many coins are out there at any given moment and other technical details, cryptocurrencies can’t be controlled.
Even if you’re a billionaire or a president or as powerful as an entire nation, you can’t modify how many Bitcoins are out there. Nobody controls the technology. That’s because they use a system called Blockchain.
The Blockchain is a system where many volunteer computers connect together to regulate cryptocurrencies just like a government governs itself with voting systems.
That means you can have the same valuable Bitcoins all over the world and they are accepted everywhere. Is just like having a US bank available everywhere, allowing everyone to join while making sure your money is always available to you.
You can think of cryptocurrencies as an update to banks. Banks have existed for many many years and they are quickly becoming obsolete. Their old systems of creating accounts providing your personal data to the government are not well received.
People understand that there are risks involved in every bank such as the government accessing your account, banks locking your funds for their own reasons and systems that force you to provide your personal data and identity which can be used against you and never in your favour.
Also banks are slow and inefficient. They work only during short periods of time 5 days a week and require many checks to receive or send your money. They are in control of what you are allowed to do with your money.
And if they don’t like it or you break any of their arbitrary rules, you can lose your funds in a second. That’s because they have close connections to governments and are forced to follow strict regulations in order to stay alive.
They also use computer programs written tens of years ago because they are reliable and they have so much logic on top of it that it is extremely expensive to upgrade to faster software. That’s why they take days to send funds between accounts.
They are relevant to the age in which we live in because there are many, if not all, corrupt governments in different areas of the world. People living there in some cases can’t even leave their country without risking their lives.
Cryptocurrencies allow people to control their funds entirely. You have your own private wallet and only you can access it. No matter the regulations of your country, you can always access your money and it will always have more or less the same value.
Compared to communist countries such as Venezuela where a dictator can print as much money as he want in order to get exorbitantly rich while reducing the value of the currency to a minimum.
Because whenever new money is printed, the total supply of that coin increases which means each individual coin is less valuable.
For instance, if you have $10,000 USD in your bank and the total supply is $1.000.000 USD all over America, you control a 1% of all the money out there.
If suddenly the president prints another million, meaning increasing the total supply to $2.000.000 USD, you’d control a 0.5% of all the money which means your money is half the valuable.
If you could’ve bought a car for $10k before, you now need $20k because prices adjust to the supply in order to achieve a balance.
That’s how much power governments have when it comes to your own money. Now in real-world situations, it would take several days if not months to adjust all prices to the new normal but it would end up in the same place: you losing half your money.
If you dig deeper you’ll find many horror stories regarding corrupt governments. The point is that cryptocurrencies aim to fix that massive security hole by using the Blockchain technology which is protected against these attacks to your net worth.
Bitcoin uses their own Blockchain. All the coin transfers are stored in blocks just like lists of data. When a block is filled, a new one is generated.
To verify that all the transactions in a block are valid, many computers connected to the blockchain run a software known as Proof-of-work which ensures that blocks are valid in a system of thousands of computers all over the world.
There are many cryptocurrencies with different blockchain implementations. There are always pros and cons. Mainly because it’s very hard to have an 100% secure system working with computers all over the globe in a way where none controls the rules.
There’s a concept called decentralization used constantly when talking about crypto. You’ve probably heard someone say “Bitcoin is decentralized”. What they mean is that Bitcoin, just like most cryptocurrencies are not controlled by a single entity like a government.
Their underlying technology, the Blockchain, is just a network of many computers connected globally adding transactions to blocks. Those blocks are saved permanently in the blockchain, one after another. That’s why you have to download the entire blockchain history if you’re a Bitcoin miner.
You need to get the list of blocks so that you can create new ones. However that’s not necessary to you if you’re just a user. There are many services with the entire blockchain downloaded for you to provide you instant access through them.
There’s also something called “light wallets” which are software applications containing the cryptocurrency history, compressed so that you can download it much faster.
According to coinmarketcap.com, there are almost 3000 solid cryptocurrencies out there that can be used right now to get your own digital money.
The main ones are Bitcoin, Ethereum, Litecoin and Tether. Those projects are constantly at the top because they provide some key benefits over others.
But cryptocurrency uses don’t stop with having your own 100% secure bank. There are many use cases using the same underlying Blockchain technology. Some of those use cases are:
- Voting: You can create businesses and virtual governments where all the participants vote fairly without the potential of modifying votes to your favour. Voting systems that can’t be corrupted by default.
- Insurance: You can create insurance contracts and documents on the blockchain in which the conditions are decided fairly to stop abusable terms and provide policies that protect you from risk and fraud.
- Real estate: Imagine buying houses while having 100% ownership of them without the potential risk of being taken from you. Even if you lose all your money, even if you end up with piles of dept, your house can’t be taken from you. Unlike current regulations where the government can take your house from you if they want.
There are many more cases and thousands of projects working in providing useful solutions to existing problems related to the abuse of power and lack of control.
To understand who is getting the most of crypto, we have to understand the main selling points of the technology. Those are:
- No central authority: nobody set the rules of cryptocurrencies.
- Anonymous: your identity online is secure because every transaction is unique.
- Irreversible: transactions can’t be reverted which means whatever happens in the blockchain is permanent and verifiable by everybody.
- Limited supply: crypto coins are scarce and the supply is set to a specific number to avoid reducing the value of that particular cryptocurrency by printing more virtual coins.
Who needs to stay anonymous and avoid a central authority? Those that are controlled on an excessive level and have an abusive central authority.
The people. Those that live in countries where corruption is extreme. Even first-world countries such as Germany have corrupt governments and systems that protect and give extreme power to the most wealthy.
Cryptocurrencies forces people to stay accountable and honest. You can’t control the system which means you can’t take advantage of it unfairly. With the creation of the Blockchain you can control your own bank as long as you’re connected to the internet.
If the currency of your country is worthless and losing value every day, cryptocurrencies are your alternative. If you are a victim of unfair policies, cryptocurrencies are for you. If your private property is at risk, crypto is for you.
If the government is trying to get your private property to force you to pay some debt you may have, cryptocurrencies are for you. That means you can avoid the rules and steal from the system while saving your earnings in the blockchain where your earnings will be unreachable.
It depends on each person’s ethics to stay honest and fair. Cryptocurrencies just provide an alternative to protect what you own at a particular moment.
That’s why you shouldn’t be surprised to see third-world countries as the main users of the technology since those are the ones getting the best value out of it.
On the other hand, some countries are so controlled to the point of not being allowed to access the internet. Those citizens can be crypto users once they escape the chains they are in. Until then, we’ll have to do what’s in our capacity to help them see the opportunities outside.
Blockchain technologies are just starting to develop as a novel concept. When it comes to the potential of it, you can imagine virtual governments in which every single person on earth is free to choose the best government for his own benefit without being forced to follow the rules of the land in which you live.
Just like the United States or the united countries in Europe, you can expect all countries to unite sooner than later to compete for people at every location.
That will end up creating the most beneficial governments where fairness is at a maximum. Similar to how competition in businesses creates cheaper prices because sellers are forced to reduce their profit margins to be competitive and win customers.
Right now people can travel to almost any location in earth but that won’t be necessary in the future if you want to benefit from the advantages available in a particular location. For instance, if taxes in China are cheaper than in Italy, I could simply because a Chinese citizen virtually and pay taxes there.
At the end, the majority set the rules when they unite and decide to take matters on their own hand to experience a bit more freedom.
Another interesting use case of crypto is private property. We can store information in the blockchain about each product while knowing it will be stored safely for as long as cryptocurrencies are used.
That means you’ll be able to move all your legal documents to the blockchain. Things like registration papers, insurance policies, ownership documents and so on will be implemented on top of crypto to guarantee the security and access to those documents.
For instance, even if you lose your driving license, you’ll be able to connect to the blockchain with your phone and access all your virtual identity to verify your driving permits.
No more carrying papers, credit cards and paper money. Everything will be virtualized to the point of not needing a wallet, just your phone. That’s why is important to be up to date with the new developments that are constantly happening.
Things like apple pay and google pay will just become bigger that’s why need a cryptocurrency alternative that’s completely secure and independent.
In this article we’ve gone from a basic explanation of what are cryptocurrency in everyday language to understand what are they, why are they important and how they work to then see specific use cases so that you get a higher level picture of what’s out there.
We talked about who is benefitting the most about crypto by understanding the main selling points of this excellent technology to discover that third-world citizens are the ideal customers of crypto.
Though first-world citizens will be the first ones in using crypto on a massive scale because they have a better access to this information. At some point it will reach all areas in the world impacting the global economy in an unknown manner.
Finally we saw the potential of crypto by discussing virtual governments, which are the next logical step in globalizing the world so that every single person can feel free to join any country’s policies for his own benefit.
Cryptocurrencies have been around for years and are just starting to develop on a more serious level which means you can expect to see all those benefits become true in the near future. Stay with crypto, stay free.