Corrupt government. High taxes. The high cost of living. Bank fees. High currency exchange rates. If you talk to anyone, no matter where they fall on the political spectrum, these topics generally are met with agreement. The power has shifted from the people to the government, and the government has turned a deaf ear to the people. The overreaching authority and corruption of the government are why crypto-currency was created. Computer coders and programmers heeded the voice of the people when governments neglected them. They put their skills to work, creating a currency that would (hopefully) extend beyond the reach of governments’ hands, be non-taxable, secure and accessible to everyone.
You see, what currency USED to be was a paper note stating how much gold you were entitled to. So, for instance, in the United States, people would trade in their gold to a bank, for which the bank would release to them a note, stating how much gold they had deposited. When the note was handed back to the teller, it could be refunded for the gold again. But the note was not specifically assigned to them, and thus they could trade that note for commodities. Not because of the value of the note, but because of the value of the gold that the note authorized. The reason they did this was simple. Gold was too heavy to carry, too difficult to transact with, and too obvious to transport secretly. The other option was to mint the gold or silver into coins, and their value was in their weight.
Nowadays, the paper dollar is no longer a deposit note but instead is its own commodity. Its value is determined by supply and demand, just like gold or silver. The difference is, its availability is no longer dependent on the populace of the country and how much gold or silver they harvest, but instead, the availability relies almost entirely on the government. The government has the full authority to create or destroy currency as they wish. This gives the government the ultimate power over the currency’s value. So what’s the problem? Well, if the citizens of a country need funds, they must work for it. The government, if they are low on funds (not an uncommon occurrence), need only to print money. But it is illegal for us to create or destroy it, thus giving the government almost unlimited power over the people. In a democratic country like the US, the result could be potentially catastrophic and is certainly not what the founding fathers intended. The pioneers of crypto-currency understood that.
So we now know why crypto-currency was created, but what IS it? Well, there are two sides to crypto-currency, both just as important as the next. So we’ll start with the more noticeable one, the currency itself. The way crypto-currency is built is very simple. It is literally several lines of code, which is designated as a coin (e.g. Bitcoin, Litecoin, Ethereum, etc.). Each coin has its own unique coding properties, which determine the features of the coin and its accessibility on the market. But on its own, a coin is just like a computer program. Any basic level hacker could access the coding and steal your coins. If the coin was the only factor in cryptocurrency, then crypto-currency would be non-existent. For that reason, the second part of crypto-currency comes into play: The blockchain.
The most important part that we must understand about crypto-currency, is that the blockchain is what gives any coin value. The blockchain secures the coin and ensures secure transactions. The way it works is very complex, and so I will try to simplify it. First of all, when a person sends a coin (e.g. Bitcoin) or multiple coins to another person, the coin(s) is sent in a block. It is a combination of your wallet key (the virtual wallet where you hold your coins), relevant transaction information, and a timestamp. Also known as a digital signature. Then, this information is sent to "miners," who verify the transaction. Miners are people who run a mining node on their computer, which automatically generates a unique code for whichever coin they are verifying, or "mining." This code basically encapsulates the unique coin code (the code making up the coin being transferred), virtually camouflaging the coin code and making it undetectable to hackers and fraudsters. This process happens several times in one transaction, the transaction jumping from one mining node to another, being verified. The number of verifications varies based on which type of coin you are transferring. So without the security of the blockchain backing the coin, the coin would be worthless.
The other question a lot of people ask is, what causes crypto-currencies to rise or fall in value? It's simple. Popularity. Bitcoin is one of the most popular coins on the market right now, which is why its value is so high and continues to climb higher. So another question to pose is, what makes a crypto coin more popular than the next crypto coin? And that brings us back to the specific coin and the blockchain. You see, if the cryptocurrency, (e.g. Bitcoin) guarantees faster, more secure transactions, that is attractive to the market. Also, the amount of vendors accepting a specific coin also determines attractiveness. So the ultimate coin would be one that has faster transactions than its competitors, more secure transactions, lower transaction fees, and many vendors accepting that specific coin. If marketed well, that particular coin will grow in popularity, and thus gain more value.
Finally, the last question. Why is it a good idea to invest in crypto-currency? This is my favourite part, where I get to break out the numbers and blow you all away. Crypto-currencies are brand-spanking new. They are just gaining traction as a viable alternative to fiat currency, and because of that, prices are still low. In ten years, however, when a quarter of the world's population will be using cryptocurrency, prices will be soaring!! Bitcoin, founded in 2009, was only $0.08 USD when it was introduced. Now, only eight years later, its worth upwards of $10,000 USD. That means if you invested $25 USD in Bitcoin in 2009, it would be worth $3.2 million USD today!!. Now, this is just the beginning for Bitcoin. Experts project that Bitcoin will skyrocket to $1,000,000 per coin, and eventually be overtaken by even better coins with stronger infrastructure and more market attractiveness. So now is the time to buy! Do your homework and don't delay! The future of crypto-currency has started. Don't let this opportunity slip away.