Today we are more than ever aware that „paper“ money is losing its position in the future finance world. Cash has been widely replaced with credit cards. Even some countries promote the use of credit cards and do not accept cash in stores like Sweeden for example has had this model for a few years now.
As the world of technology is evolving it was kind of natural to invent crypto as „ digital money“. So some may ask how do even crypto works, where does come from, how can be used, where does it get value. To understand the better crypto world we should introduce ourselves first with some basics of paper money. Government issues both FIAT money and representative money.
FIAT money is physical money both paper money and coins it is backed by a country's government instead of a physical commodity or financial instrument. Most worldwide money is fiat money such as USD, EUR, GBP. The value of FIAT money is determined by the government. It depends on government stability and the nation's economy.
Representative money is government-produced money backed by a physical commodity such as precious metals. Other forms of representative money are checks and credit cards.
Now when we know where does paper money comes from and its forms we can discuss crypto and its value.
Crypto is the virtual currency it is secured by cryptography it can not be double spended. Most of the cryptocurrencies are based on Blockchain. A cryptocurrency is a type of exchange, it is digital and uses encryption techniques to control the creation of monetary units and verification of transferred funds.
To make better sense of what Blockchain is we can define it as a collection of a database linked with each other, it is strongly resistant to alterations and it is secured with cryptography. Every time crypto is bought or sold, the transaction is added to the blockchain which is available to other crypto holders. Anyone can join and participate in the blockchain, but data on individual transactions — and the people involved with them — are secured using cryptography.
Cryptocournecys are gaining their value based on community involvement user demand, scarcity, coins utility. To make Cryptocourency valuable you need to make it usable within the blockchain ecosystem. The value of cryptocurrency is dependable on the progress of project development. A project which is successful and establishing good partnerships with companies and launching software that is user-friendly is more valuable on market. All of that are indicators that the project is going in a good direction and affect the value of that crypto project.
In today's world Cryptocurrency have been very popular since they are decentralized and not dependent on the government. Crypto can be used for various online payments but mostly they are considered as a very good investment since the market is rapidly growing.
We also need to be aware of the risks which are connected to cryptocurrency. The market of crypto itself is very unstable and in some cases can fall in a highly bearish run which can cause huge damage to the investors. But on the other side it is very profitable for traders even for stakes and holders since the market is very vivid and for now, mostly is rapidly growing and evolving. Overall we can conclude that the world of Cryptocurrencies is very interesting and it deserves huge respect for what it has become in these past years.
