Crypto, Bitcoin, Ethereum and NFTs. Words you’ve probably heard before but never truly understood what they mean or what they stand for. Now it’s time to scratch the surface and understand the world of cryptocurrency.
The Birth of Cryptocurrency:
To really know what cryptocurrency is, you first need to know what a blockchain is. A blockchain is a disruptive technology (too many new terms, I know! But don’t worry you’ll know them all) this technology is basically a place where several computers connect to one another and act as one computer. Seems like a cool technology, right? but who invented it? It was created by the man with no face, Satoshi Nakamoto.
Nakamoto thought of using the disruptive system and cryptography (how to encrypt the data so only those who have the key can read it) to create a new blockchain system. He believed that it could be a financial system where we can transfer money from one country to another in less than 15 minutes. Thus, he created bitcoin, a type of cryptocurrency. Bitcoin is basically encrypted data on the blockchain.
People can now use this cryptocurrency for transactions. But wait? How can you make sure that it’s valid, not some sort of falsified money, or be sure that no one can steal it before it reaches its destination? Nakamoto decided to create a puzzle and whoever can solve it will be awarded bitcoins and will be able to make whichever transaction they wish for. Everyone got excited and bought the most powerful computer they could find so they can have the chance to win and make transactions from here PoW (Proof of Work) was born and through it we can make sure that the transactions being placed are valid. Sounds nice? But unfortunately, everything that is good comes with a price. Yes, it validates the transactions but it takes a lot of time and it isn’t eco-friendly
All these transactions use bitcoin. So, why is bitcoin so special? Aside from making you able to transfer money in only 15 minutes, you also don’t have a limit. You can transfer as much money as you want but that’s not all, it also doesn’t track who sent it to whom. It only shows your wallet address. All transactions are hidden from everyone and most importantly from the government. So, if you wish to transfer all your money to another country, no one will ever know.
Investing in bitcoin seems like a good opportunity, yet there’s still a risk factor to it. Because of its volatility, people are skeptical and afraid of the sudden changes in its prices. For that, most investments come from the big whales of the business industry or early adapters.
The Story of Ethereum:
Because of all the doubt created by using bitcoin. Vitalik Buterin decided on creating a new blockchain system called Ethereum. He saw the potential of the blockchain and using it as a financial system. He decided to make it easier to interact with.
And Ethereum enters where instead of using money for transactions, you write a smart contract which is an application written in the language of solidity. You can use this application for many things such as charities, paying salaries, giving donations…etc. and from here another type of application appeared. The Dapps (decentralized apps) and people began to believe that you can use these apps to create a network like Facebook or Twitter without being under the umbrella of the mother company. Because the difference between Ethereum and the actual Facebook is that it is a Dapp meaning it’s all controlled through the system itself and you have more freedom than on any other apps.
The Unique NFTs
We discussed bitcoin, we discussed Ethereum. Now it’s time for the NFTs.
I am sure you’ve heard of the NFTs having something to do with pictures you find on the internet but they’re more than just that. NFTs are non-fungible tokens that are also stored in a blockchain but unlike the bitcoin where if you got the very first one it’ll be the same as getting the 1000 bitcoin.
NFTs have a unique nature, the first coin will not hold the same value as the 1000 coin, much like artwork. It connects the NFT to a person’s wallet so wherever that NFT goes it’ll be known that it belongs to that wallet and that wallet alone. And because of that, you can use NFTs as utilities. Some ideas as to how to use it:
Game currency.
let’s say you fought the big boss and got a drop for killing them. This drop could be a unique NFT that you can sell for real money and every drop you get is another chance for an NFT and another chance to gain money. Cool, right? Now talk about making a career out of it.
Real estate
Without having to go through the hassle of going to the government, to getting the papers done, to following all the procedures to own real estate. You can just go to the blockchain and buy a real estate NFT and everyone will know that that wallet address is the owner of X real estate.
And the best use of it is for artists
You can create NFTs and go to your true fans and tell them to support your songs through them and here you create a win-win situation. You gain money from their support and they also gain royalty over your songs. Both sides make money, both sides are happy and you as an artist aren’t chained to any company, your music is yours and you have complete freedom to do as you please.
Business owners
You can create NFTs, sell them and then use that money to start your business.
Crypto is definitely a good investment and has many perks but no one truly knows when will it reach its full potential or what the future holds for it. Maybe one day it’ll be part of our lives, be part of our internet. But now all we can do is understand it more and see where it goes.