Easy to understand guide for students: What is Blockchain, Cryptocurrencies and of course the Bitcoin.
Hi guys,
I hope you're all doing great and are prepared to learn something new. Today, I would like to focus on the hottest topic of 2017, the concept of Cryptocurrencies.
Definition of blockchain:
First of all, let’s start with the definition. The blockchain is the technology that powers all cryptocurrencies worldwide and of course Bitcoin. Think of blockchain as an introduction of the internet in 1983. So, yeah it’s a BIG thing. The blockchain is a decentralised public ledger of all transactions that ever took place. Blockchain can hold certain amount of information per block (List of recent transactions) which later is getting attached to chronological ledger. In public ledger, any person can see a list of all transactions that ever took place at this cryptocurrency. Therefore, making markets fairer and more transparent as anyone has access to this information.
A little story behind this concept:
In the past, banks had all-controlling power over the transactions. Banks confirmed transactions between two parties themselves and had all control over this process. Thus, sometimes these banks have manipulated the markets and influenced inflation rates.
Banks had all information on their clients which was not disclosed to anyone and they had a final say on the outcome of a transaction. In addition, banks are known for quite high commissions and long processing time when it comes to international transfers. In some cases, an international transfer can cost hundreds of US dollars and be processed in 3-4 weeks.
With time, people demanded fair, more cost-efficient and transparent banking services.
That's how the concept of cryptocurrency was born with the purpose to solves all issues above. Take a look at this PDF article, there's a great chart to illustrate bitcoin transactions https://bitcoin.org/bitcoin.pdf
Cryptocurrencies
Cryptocurrency is basically digital money with a fixed number of tokens that ever will be released. The reason why it’s called ‘cryptocurrency’ is that cryptography is used to protect the data within the network. Cryptography is very complicated and sophisticated security concept which is known to be one of the best in the world. In other words, it is a very complex way of encrypting the data.
For example, Bitcoin:
Only 21 million bitcoins can be issued.
Therefore, this eradicates the concept of inflation as there will not be an increase in money supply as it happens with US dollars (USD), Pounds of sterling (GBP) and other currencies.
As result, consumers will not expect to see decrease in their purchasing power.
Why is everyone talking about Bitcoin?
Bitcoin is the first cryptocurrency which was founded in 2009 by mysterious alias ‘Satoshi Nakamoto’. The reason why the whole media is talking about it is that in
January 2013 its price was at $19/bitcoin and now (13 of January 2018) the price sits at $14,178, thus demonstrating the stunning growth of 74,521% in the period of 5 years. In the history of investments, it is a rare phenomenon to see such an outstanding growth. It is equivalent to ‘California Gold Rush’ in 1848 as everyone is desperate to make money.
Also, Bitcoin helps to proceed international transfers with very low commissions, on average around $5 to $9. In addition, the transaction will reach its recipient within 2-4 hours on average under normal conditions. So, I hope now you can see all advantages of bitcoin compare to regular bank transfers. In addition, bitcoin provides required privacy to those who are using it but as time passes government found a way to identify the person behind the transactions. If you would like to get maximum privacy on your transactions, please pay attention to ‘MONERO’ very interesting altcoin with fascinating privacy features.
Why are Cryptocurrencies big deal?
The hardest part of any cryptocurrency is to convince the public to accept it as a medium of exchange. Some of you might be conservative to this concept because you cannot see or touch your money. However, think of age stones when everyone was trading with little rocks or in the 1400s when gold was medium of exchange. I’m quite confident it took some time to convince people to accept a piece of paper instead of gold coins.
Here we have the same thing.
In addition, I would like to tell you a little fact about money.
Did you know that only 8% of all money is existing in its physical forms such as cash or coins? The reality is money you see on your bank account is not printed and if everyone is suddenly decided to withdraw their money there will not be enough for everyone. Therefore, your money is just blips on your screen. So, as you can see we are already in the digital era and cryptocurrencies only will help to make banking more transparent and cost-efficient for its users.
So why am I telling you all this?
The thing is I’m a practical man, most of the things I see or hear I try to use to my advantage and of course I want to help you, my friends to benefit from my discovering’s
Here is my suggestion, I think cryptocurrencies are a great way to familiarise yourself with new technology and I think it provides great investment opportunities for the near future.
The main advantage of this type of investment is very low investment entry, you literally can start with as little as £10. I’m not encouraging you to jump into it blindly, so do your own research as well.
Ten pounds is just your lunch but if you would have spent £10 on ‘Ripple’ in January 2017 now (14 of Jan 2018) you would have approximately £2863, YES, it’s not a typo! This year this cryptocurrency has increased by approximately 28,636%. I guess your lunch would be worth a little more now!
This example shows you the great possibilities of this crypto market and as investors, we have a saying ‘Investment opportunities always will be there’
Now, all you should do is to find the coin which will make you filthy rich!
Here is the list of interesting coins in my opinion:
- IOTA
- MONERO
- Zcash
- NEO
- Decred
Thank you for the time you have decided to spend reading my article, I hope you weren't disappointed :)
That's all for now!
