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Articles / July 5, 2018 / Comments: 0

From the primitive society to cryptocurrency

Lately you’ve probably heard a lot about Bitcoin in the news,  Internet and other social media. But what is it exactly and why does it matter? So first of all it’s the best form of money we’ve ever seen. It’s the digital money of the digital age. It’s the scarcest, most divisible, most transportable, most verifiable  and most recognizable form of money in the history. How do we know this? Let’s analyse the money history from the very beginning.

Before the using of paper money and coins, what did people use? The earliest known transactions got done by bartering. People exchanged their goods and got what they need. After that the first money and more comfortable trading system appeared. People could buy something to pay with stones. To make this system more common and popular, they started to use gold as a currency. And finally in 700 B.C., the earliest known coins got issued. Gold and silver gained recognition as precious metals. Residents and travellers were charged for taxes.

Paper money came into use in the 13th century. People receiving the bill took it to a trading house. These were the first banks. The financial industry made the first step to secure and safety.

From that time the history of money has changed so much. And now we have credit cards, worldwide bank-transfers, online shopping and digital currencies – cryptocurrency.

What is the cryptocurrency? Cryptocurrency is a form of digital money that is designed to be secure. It’s a currency associated with the internet that uses cryptography, the process of converting legible information into an almost uncrackable code, to track purchases and transfers. So the cryptocurrency is a new step of the worldwide financial development.

If we go back to the age when paper money had just appeared, we can see that they were reinforced by gold. People could save their gold in the bank and received money to use it as a new currency.  And now, in the age of the new technologies, money aren’t reinforced by gold. The US has built a trust to the USD around the world. It’s the international and transparent currency which controls different currencies in the world. The same situation with a blockchain. It’s a transparent system where you can keep your money to be sure that it’s safe and secure. You are the only owner of your money and you don’t need to have a deal with a trusted intermediary, such as a bank or electronic mint, in order to verify the transactions. With a blockchain system your money can’t be double spent. All the transactions are publicly announced to the network.

So what are the advantages of the cryptocurrency in compare with a paper money and the bank system?

  • The cryptocurrency is durable. As a digital good, it doesn’t decay over a time, whereas paper money wear down with use and should be constantly replaced by mints  or central banks.
  • The cryptocurrency is divisible. Anyone can divide it by any number, instantly and for free. And the paper money is easily divided only if you have access to the exchange.
  • The cryptocurrency is verifiable. You know immediately if a digital currency you receive is real.
  • The cryptocurrency is portable. It’s totally easy to keep on your person or send the  cryptocurrency across the world instantly. And it’s fairly easy to transfer the money in the small quantities, but much harder then digital money, especially over the long distances.

Perhaps even more important point is that the cryptocurrency is gaining momentum. There are millions of people around the world using the digital money and hundreds of thousands more starting each week.

 

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