Cryptocurrency in 1-2-3

In the 90s there where a lot of banks that invested money in an attempt to develop a digital monetary unit (today we call it cryptocurrency). There was no success on the latter project until Satoshi Nakomot launched Bitcoin (BTC) in 2008. What he did was to encrypt each and every transaction, but not the communication between the payer and the receiver. You know, the banks encrypt the communication between the customers and the banks, which is understandable when you run a business. Since the transaction is encrypted in both the transaction and in the block, it is named cryptocurrency and not digital money.

The thought behind crypto was to make a technology that solved the problem many in the world experience: to pay from one person to another, fast and cheap. Some cryptocurrencies are also created to develop software programs on the Blockchain-technology, ref play2earn games or other NFT projects.

One can still read in the news papers that the cryptocurrency is not backed by any value. This is most certainly wrong, many cryptocurrencies are backed by as much value as Microsoft is backed by its stock market price, which also creates development tools for computer programs. What is it really that back the price of Microsoft? The same as BTC – that it exists someone who are willing to pay more for the stock/BTC that they who already own the stock/BTC. Also, if there are more buyers than sellers will the price in most cases rise, and vice versa if there are more sellers than buyers the price will fall.

However, cryptocurrency is a form of digital money, but unlike ordinary currencies (such as the USD) is not controlled by a central bank and linked to a national economy. As you probably know, there are thousands of different cryptocurrencies now, with BTC being the largest and most well-known. For all transactions, the players are used all over the world. In Norway alone, it is estimated that around 400,000 now own cryptocurrencies (6 million people live in Norway). If we compare with those who own shares, it has become significant as shareholders in Norway reach 531,000 investors, according to the Norwegian Financial Supervisory Authority.

As mentioned earlier, BTC is based on an idea of security and freedom from central banks and other authorities, zero censorship and no intermediaries in transactions. BTC was created due to the financial crisis in 2008 which spread from the financial industry in the US and which cost the world thousands of billions. The BTC has a ceiling of 21 million "coins", which will mainly prevent inflation. BTC was approved as a means of payment in El Salvador in 2021, while the USA and the EU (European Union) are working hard on regulations.

A blockchain is linked to a cryptocurrency in the sense that it can be used as a digitally distributed accounting book for financial transactions. This account book is open to everyone and is stored in the entire system - something we know very well here in Hive: decentralized system. The technology was mainly made to support BTC but has since been used for several other cryptocurrencies and projects such as NFTs and games. NFTs stand for Non-Fungible Tokens, and are digital files created by blockchains - the technology behind cryptocurrency. NFTs have unique identification codes, which give artists, for example, opportunities to create an official version of a digital asset and sell it to an new owner who in turn can resell it at a higher value, etc.

Whether cryptocurrency will be for the banking and finance industry what streaming was for the music and film industry, we must wait and see. It probably depends on the network effect, trust in the technology and the needs of the users. So, if it continues with cryptocurrency as it has done in 2020 and 2021, then we have a bright future ahead of us Hivers! Keep on talking to people about Hive, synergies may suddenly be upon us!

Cheers
-Olebulls

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