Crypto Cracked In Ten Words: A Reading Guide

one Bitcoin

The first and by far the most important cryptocurrency, on which all the others are based. Created by a person (or persons) under the pseudonym Satoshi Nakamoto. He published the idea in 2008, at the height of the financial crisis: a few weeks after the collapse of investment bank Lehman Brothers. Nakamoto devised a decentralized monetary system. To ensure that the account is correct, no central authority such as a bank or government is required.

All the bitcoins together are now worth about $700 billion. The total value of all cryptocurrencies together is just over a trillion dollars. Nakamoto has kept around 5 percent of all mined bitcoins.

Bitcoin fluctuates too much in value for seamless payments and transactions are also too slow and expensive. The currency has become primarily an investment instrument. Bitcoin Cash is a variant that has been spun off from Bitcoin (a “fork” in jargon), intended to be more suitable for everyday payment transactions.

De Standaard focuses on in-depth journalistic investigation of what determines and disrupts our lives, across generations and borders. Because understanding the issues of the day begins with understanding the spirit of the times.

Read more >

two block chain

According to many, this is the most important innovation of cryptocurrencies, more important than cryptocurrencies themselves. The blockchain is an online record in which transactions are stored, such as a payment in crypto currency or the sale of a non-fungible token or NFT. (see 6)† There are multiple identical copies of the blockchain, stored on different nodes or computers.

The chain is immutable, which is guaranteed by cryptography. Only at the end of the chain can blocks be added. New transactions become a block that is added with a timestamp to all instances of the chain.

Heavy calculations are required to add blocks to the blockchain. The computers that provide that calculation are paid in crypto currency; this activity is called ‘mining’. In addition to the bitcoin block chain, ethereum is especially important, that is, the block chain behind the ether currency, a very versatile block chain that can be used to smart contracts (see 9)

3 CRYPTOCURRENCIES

Today there are thousands of cryptocurrencies. All cryptocurrencies that are not bitcoin are called altcoins or alternative cryptocurrencies. Ether is the other major cryptocurrency. so-called memecoins they are crypto currencies that mostly depend on a good name or other find. A typical example is the dogecoin, initially conceived as a joke, but which has become a major crypto currency due to the support (serious or not) of billionaire Elon Musk.

“There are many cryptocurrency scammers, but you have come to the right place”

Cryptocurrency mining requires an enormous amount of computing power and (thus) energy. This is why this usually happens in large computer rooms, in places where electricity is especially cheap. In response to the popularity (and lack of verification) of cryptocurrencies, many central banks are now considering launching digital currencies themselves. These are called Central Bank Digital Currencies (CBDC) and do not necessarily use a blockchain.

4 DeFi or Decentralized Finance

One of the buzzwords in the world of cryptocurrencies. Many startups offer financial services like loans on top of the blockchain, in a decentralized way. No bank, government, or other centralized entity is involved. So, in theory, you don’t have to trust any entity either. zero trust is a major slogan in crypto land.

Critics point out that the world of cryptocurrencies is not so decentralized after all. Some players are getting more and more power for themselves. Anyone who wants to trade NFTs is almost forced to go through OpenSea, for example, and thus trust OpenSea as well.

5 Exchange

An online place where cryptocurrencies are traded. You can usually store your cryptocurrencies there as well, although heavy users prefer a separate one. wallet (see 10)† Major exchanges include Coinbase and Binance, founded in 2016. Because money has already been stolen from exchanges on a regular basis, many crypto investors opt for their own hardware or software wallet.

6 Non-Fungible Token (NFT)

An NFT is a digital proof of ownership, recorded on a blockchain, usually that of ethereum. Where the name from? One symbolic it is something that has value and is stored on a blockchain. An ordinary crypto currency is expendable or exchangeable for another. One non-expendable o Non-redeemable token refers to something unique, for example, a work of art or a collectible.

The most popular place to trade NFTs is the OpenSea website. The NFT trade has mainly focused on projects like Bored Ape Yacht Club: 10,000 nearly identical drawings of bored-looking monkeys, trading for hundreds of thousands of euros each.

10,000 crypto monkeys conquer the planet

In principle, any asset, even a house, can be traded through an NFT, as long as local law recognizes that form of digital sales contract.

7 Proof of Work and Proof of Stake

The basic mechanism by which bitcoin works is called work test† If you want to add a block to the blockchain and earn bitcoins this way, you have to do heavy crypto calculations. This makes transactions slow and relatively expensive, and has a high ecological cost.

Several alternative mechanisms have been proposed. The cryptocurrency ether wants to change throughout this year proof of stake for its blockchain. If you want to add a block to the blockchain, you have to do less calculations, but you have to use your own crypto currencies: the to bet or bet. The more crypto coins you stake, the more chances you have to add a block and the more new crypto coins you can earn.

8 smart contract

A piece of program code that is executed on the blockchain when certain conditions are met. For example, a smart contract may stipulate that each time a certain NFT (for example, of a piece of art) is resold, the artist will receive 10 percent of the sale price.

Essentially, they are contracts that consist of program code and are executed automatically. For example, they can also be used to issue loans.

9 stable coin

The value of bitcoin and ether varies widely, so speculation in these currencies can lead to large profits and losses in a short period of time. But there is also stable coins whose value is usually pegged to a (relatively) stable currency. USDC is a stablecoin whose value is pegged to the dollar.

10 purse

You can store crypto coins and NFTs on an exchange, but you can also store them in your own crypto wallet or purse† Can run on your smartphone or PC, which is connected to the Internet. that will be a hot wallet called.

It could also be a device that looks like a USB stick and is not connected to the Internet. Sun cold wallet it is in principle more secure, because there is less risk of hacking and theft. A crypto wallet has an address that others can use to deposit crypto currencies into it.

Strictly speaking, a crypto wallet contains no coins, only the crypto keys (you private keys), which prove that you own those coins.

Leave a Comment