How Cryptocurrency ACTUALLY works.

Summiz Holo

The Evolution of Currency and Monetary Systems

• The evolution of trade from bartering to currency systems, highlighting the transition from goods exchange to using coins and then paper money.
• Currency's value is based on government trust and not on intrinsic material value, exemplified by paper money being a promise from the bank.
• The current stage of monetary exchange involves digital transactions that are simply entries on a spreadsheet rather than physical money.
• Cryptocurrency is viewed as the most convenient era of exchange, being entirely virtual and representing the transfer of digital assets.
• Cryptocurrencies operate on a decentralized system with a single ledger that records all transactions, maintained by multiple copies across the network.
• Cryptocurrency mining involves using computer power to process transactions on the ledger, rewarding miners with the cryptocurrency for their efforts.

Cryptocurrency and Blockchain Overview

• Instead of checking with one bank's records, shops check with every computer on the network for sufficient funds, leading to a decentralized verification process.
• The system's organization allows easy detection of tampering, as discrepancies in the ledger are quickly identified by the majority of computers.
• Cryptocurrencies eliminate the need for traditional banks, enabling instant international payments without spending limits or concerns over exchange rates and interest rates.
• Cryptocurrencies are secured by cryptography, with blockchain being a secure type of ledger, not a currency itself.
• Each transaction in Bitcoin is recorded as a block that includes transaction data, a unique hash, and the hash of the previous block.
• If a block is tampered with, its hash changes, invalidating all subsequent blocks, making fraudulent transactions extremely difficult.
• Investing in cryptocurrencies involves exchanging traditional currencies for cryptos, hoping their value increases for future profit.

Cryptocurrency Insights

• There are over 4,000 different cryptocurrencies, each with distinct properties; for example, Ethereum processes transactions faster than Bitcoin, and Cardano is considered technologically superior.
• Cryptocurrency is highly volatile and speculative, with prices affected by news and social media, leading to inconsistent value.
• Acceptance of cryptocurrencies as a payment method is limited, with many companies changing their stance on accepting Bitcoin.
• Environmental concerns arise from the high electricity consumption required for cryptocurrency transaction verification, although traditional banking also consumes significant electricity.
• There is a perception that cryptocurrencies are ideal for criminal activity due to lack of regulation, but data shows a lower percentage of criminal transactions in crypto compared to cash.
• Non-fungible tokens (NFTs) allow for digital ownership of items, which doesn't prevent others from using or sharing those items, raising questions about their value.

NFTs and Digital Assets

• A lot of these NFTs are literally just JPEG images.
• There's a distinct difference between buying an NFT and buying the rights over something; with an NFT, you don't get reproduction rights.
• An NFT proves ownership over an asset using blockchain technology.
• An NFT of the Gucci Ghost sold for $3,600.
• Jack Dorsey sold the first tweet ever made as an NFT for $2.9 million.
• A photo overview of one guy's art sold for $69 million, giving the buyer digital ownership of a JPEG image.
• Dogecoin was created as a joke, based on the same tech as Litecoin, but gained value as people started investing in it.