To put it briefly, cryptocurrency is a type of money that is not connected to any center and is produced and transferred in a chain that is very different from the networks. Bitcoin, which emerged in 2009 and was developed by someone named Satoshi Nakamoto, attracted great interest as it could be transferred easily and quickly without government intervention. Thus, it was possible to transfer easily without bank procedures.
Emergence of Altcoins
- Bitcoin is the first cryptocurrency to emerge. However, many different cryptocurrencies were later introduced. All of these cryptocurrencies that emerge after Bitcoin are defined as altcoin.
- After Bitcoin, the cryptocurrency Litecoin is known as the first altcoin to be developed inspired by Bitcoin. Like Bitcoin, it has no center, but unlike Bitcoin, there is no payment system.
- Another of the important Altcoin cryptocurrencies, Dash, was released in 2014. This cryptocurrency attracted a great deal of attention in the early periods when it was put into use thanks to the high confidentiality it offered in transfers.
- Ethereum, which has similarities to Bitcoin, was launched in 2015. Ethereum, a project developed by Vitalik Buterin, is considered a candidate to compete against Bitcoin.
- With its fast structure, the cryptocurrency Ripple, which is used by many platforms today, is also an advantageous type of altcoin due to the fact that the transfer fee is quite low.
Why is there more than 2.000 cryptocurrencies?
The reason why there are so many types of cryptocurrencies is that each cryptocurrency processes at different speeds and each sub-coin stands out with a different quality. Cryptocurrencies are protected by very different encryption techniques, which is where they come from. Cryptocurrencies that operate in the virtual field without a center do not see the expected value in the first release years, but they are seen as an asset that is attracted by many investors today. The value of cryptocurrencies may not be associated with the country’s economy. This is because it is not connected anywhere. So how are cryptocurrencies valued? In fact, the answer to that question is very simple! As in all areas of our lives, the supply-demand relationship is the most important factor determining this value. In other words, the value of cryptocurrencies increases as demand increases, and the value decreases as demand decreases.
What to know about cryptocurrency
- Although cryptocurrency emerged in 2009 with the manifest of Satoshi Nakamoto, the studies on this subject date back to 1983.
- Cryptocurrencies differ from the central currencies. Some of these are advantageous and some are disadvantageous. However, the biggest difference is that while one should act according to the center and inflation policies, the other should only vary according to the supply-demand ratio. In addition, cryptocurrencies are very fast in transfer transactions.
- The biggest disadvantage of cryptocurrencies is that the amount sent cannot be recovered due to the lack of a specific center in case of incorrect transfer.
- While the government has the authority to increase inflation by printing as much money as it desires in the central currencies, there is a limit to this production in cryptocurrencies and more than 21 million cryptocurrencies will not be produced. This is a very remarkable point.
About cryptocurrency production
- Cryptocurrencies are produced by “miners”. This production is quite costly. So much so that very powerful system requirements arise. Adding energy and labour costs to all this, it may not make much sense to produce cryptocurrencies. But to make this easier, there are digital exchanges where you can convert your own currency into cryptocurrency and enter the cryptocurrency market.
- You can also show your presence in the cryptocurrency market in exchange for an appropriate commission. Virtual money varieties today exceed 2,000.
- Although Satoshi Nakamoto produced as much cryptocurrency as he desired at the time of the emergence of cryptocurrency, the money he produced had no value because there was no one else to use this technology. However, with the support of Hal Finney, one of the leaders of a group that had previously conducted research in this field, the first Bitcoin transfer took place between the two.
First purchase with cryptocurrency
Although cryptocurrencies were started to be produced after this money transfer between the two, no one had any idea how to use them. Money was being produced, but as no one knew about the cryptocurrency market, it had no use for it. In 2010, a user placed an ad on a form saying that he wanted to buy pizza in exchange for the Bitcoins he produced, and something that had never happened before. $25 worth of pizza was sold for 10,000 Bitcoins. After this date, the reputation of cryptocurrency, which reached its original purpose, increased gradually and many investors started to take part in this market.
But there was one other thing that users were curious about, which was privacy. This is because name and surname information was not included in the accounts in any way. Digital wallets entered with an IBAN-like number and a password specified by the persons did not have the rights of the owner. In fact, there was no one who could claim rights in a decentralized system. However, this was already explained by some protocols;
- Responsibility and transfers of digital wallets created by the person were entirely under the responsibility of the person.
- The system did not approve the transfer to an invalid account, but it could not interfere with the cryptocurrency you accidentally transferred to an account registered in the system.
- For this reason, you had to pay attention to the actions you performed.
The solution proposed by the system for this case was to create more than one wallet. So much so that even though personal information was not visible, the transfers you made and received were visible to everyone and therefore a large amount of cryptocurrency could attract the attention of the fraudsters and put you on their network, so they, even by opening hundreds of wallet accounts, emphasized the need not to re-process the same wallet.
Once the privacy issue was overcome thanks to the above transactions, the emphases was placed on “where to use cryptocurrencies”. No one was aware of this project at first, but many people turned their eyes to cryptocurrency with increasing demands and rising value and profitable earnings.
- Significant investors and online quarterbacks entered the cryptocurrency market and began to actively exist.
- Many companies globally have agreed to trade cryptocurrencies. That is how cryptocurrencies got into shopping.
Views on Cryptocurrencies
Different views were described regarding cryptocurrency and experts were divided into two:
- The first group felt that the secrecy and anonymity provided by cryptocurrencies were very suitable for illegal use and were supportive and should be banned.
- A group of experts argued that cryptocurrency was a good investment instrument and that it was reasonable for the speed and value of the transfer process to increase or decrease according to the supply-demand balance and opposed the opinions of the other group.
- However, except for a few states, the majority of which are Middle Eastern countries, there has been no legal regulation on cryptocurrencies. Therefore, cryptocurrencies were neither prohibited nor taxed.
Given the above information relating to the adventure of the emergence of cryptocurrency, we should also state that many application giants today accept payment in cryptocurrency. The use of cryptocurrencies, which you can convert into any currency at any time, is increasing and proliferating in many countries around the world.