What Is Crypto Currency ?
Crypto-currency and Altcoins…What’s it all about ?
You’d have to still be on dial-up to have missed the Crypto-splosion…
Bitcoin and Blockchain, the technology which underpins the currency, have topped the top tech to watch lists for years, and with good reason. The idea behind blockchain is nothing short of revolutionary.
What is Crypto-Currency and Blockchain?
Well, depends how long you’ve got… but the simple answer is this…
Crypto-currency is a monetary system, which is underpinned by a public ledger.
Look at it like this… If you withdraw £10 from your local bank, the bank keeps the ledger. You may get a receipt, but the bank is in charge of the paperwork. If you then go on to give that money to your mate Brian, the records stop as only the bank has the figures.
In blockchain, there are multiple ledgers. So when you take £10 out, both you and the bank keep a ledger. Then when you give that money to Steve, he gets a ledger too. But importantly, these ledgers need to agree. So when you give Steve the £10, both your ledger and his ledger communicate with the bank’s ledger. Only when they all agree will the money actually move from each ledger.
- This is a very simplified version, but it presents the fundamentals pretty well.
- This transparency is one of the features that make blockchain such an exciting prospect.
- Another good definition of crypto-currencies is set out in recent EU regulations.
- Amendments to Directive (EU) 2015/849 which most affect crypto-currency.
in point (3) of Article 2(1), the following points (g) and (h) are added: “(g) providers engaged primarily and professionally in exchange services between virtual currencies and fiat currencies; (h) wallet providers offering custodial services of credentials necessary to access virtual currencies.”;
Article 3 is amended as follows: (c) the following point … is added: …” ‘virtual currencies’ means a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.“;
(22) in Article 65, the following second paragraph is added: “The report shall be accompanied, if necessary, by appropriate proposals, including, where appropriate, with respect to virtual currencies, empowerments to set-up and EN 39 EN maintain a central database registering users’ identities and wallet addresses accessible to FIUs, as well as self-declaration forms for the use of virtual currency users.”;
You’ll note that the regulation refers to Fiat currencies and Central banks. This means that Bitcoin and the other crypto-currencies are not protected by a government organisation, or indeed any organisation.
Bitcoin Boom or Bust?
Bitcoin and the other coins have value thanks to the simple laws of supply and demand. As you read this the supply is getting pretty low, while the demand is very high.
What keeps the demand high is that the coin has shown remarkable resilience. From its shadowy early days on the dark web to the recent price spikes, Bitcoin has kept on rolling. Because the blockchain on which it relies is virtually tamper-proof, that demand is likely to continue and, if anything, increase.
Why does Bitcoin have value?
Oh be careful, Bitcoin is a bubble… It’s all gonna crash one day… Get in quick or you’ll miss it…
Folks say a lot of things about Bitcoin and crypto, but one thing that Bitcoin, in particular, has done over the years is to prove them all wrong.
So. is it a bubble? Well, technically it is, but it was a bubble when it was $5 a coin, and again at $500 a coin and it’s still a bubble at $8,000 a coin. The point is, it’s survived each and every crisis. In many ways, Bitcoin is a virtual Dwane ‘The Rock’ Johnson… It doesn’t seem to matter what catastrophe we hit him with, he always manages to get the baddie and save the girl.
Other Notable Coins
Bitcoin will always be the first of the crypto-currencies, but it will be far from the last. Some folks will tell you that the Bitcoin boat has sailed, and while it’s true that without Marty Mcfly’s Delorian, it’s a little too late to get in on the ground level, you can still invest and trade in Bitcoin. That said there are others who have yet to sail.
Big players in the field.
Ethereum – Created by Vitalik Buterin, when it first launched in JULY 2015, it attracted over $18 million dollars worth of Bitcoin and it continues to hold the number 2 spot.
Ripple – Ripple is unlike a lot of other coins in that it is not actually blockchain based. Its tokens are known are XRP and Ripple was designed as a payment system to compete with the likes of VISA.
Litecoin – Litecoin is a variant of Bitcoin which is still viable to mine. It is often referred to as Bitcoin silver.
Bitcoin Cash – Bitcoin Cash is a hard-fork from Bitcoin. This a rare occurrence which happens when there is a significant delay in verifying a blockchain transaction. The resulting fork creates a new blockchain. Think of it as a kind of dividend for holding Bitcoin at the right time.
IOTA – IOTA is a next-generation coin which uses a system similar to blockchain but not tied to it.
Raiblocks – Another next-generation coin which uses a variation of the blockchain.
Tron – A rising coin developed by a team linked to Asian mega-site Alibaba.