What is cryptocurrency. Explaining in simple words
Cryptocurrency is the result of computer calculations; electronic registers storing information about how much a user has a cryptocurrency and where he transfers it. Cryptocurrency is stored in special electronic wallets.
With the advent of the Internet, there have been periodic attempts to create digital currency around the world. However, no one trusted these projects - and they did not gain popularity. They were too easy to fake.
The first cryptocurrency, Bitcoin , was able to solve this problem using blockchain . This system has been compared to a large book containing all the records of what is happening with the cryptocurrency. And every bitcoin owner has an independent, but identical copy of this book to others.
The entries in all the books are true and the same. Neither banks, nor the government, nor the creator of the cryptocurrency can fake these records. In other words, there is no single controller in the blockchain, the system is controlled by many participants. The system, built on mathematical calculations, protects digital currency from counterfeiting or hacking.
Today, cryptocurrencies are gradually becoming a serious competitor to the traditional financial system. Ordinary modern money issued by central banks is not backed by gold or other precious metals.
Central banks do not control the exchange rate of national currencies, but they can influence the amount of money in circulation and other parameters. Cryptocurrency, in comparison with conventional currencies, is transparent, and its quantity is limited by mathematical formulas, and not by the interests of states.
Errors in use
In the second half of 2020, the Central Bank announced its intention to create a national virtual currency - the digital ruble. It should become the third form of existence of the ruble on a par with cash and non-cash money. The Central Bank plans to issue the digital ruble itself. This currency will not be considered a cryptocurrency, so it would be incorrect to call it a "Russian response" to bitcoin.
Bitcoin was the first cryptocurrency in the world. Its creator is Satoshi Nakamoto, whose identity has remained undisclosed until now. He wrote the code and formulated the principles of the future cryptocurrency network. This happened in 2009. And already next year, bitcoin's active expansion into the world economy began.
In addition to the famous bitcoin, there are quite a few popular cryptocurrencies. One of them is ether, the currency of the Ethereum blockchain platform, created by Vitalik Buterin from Russia, the youngest cryptocurrency billionaire in the world. Born in 1994, he has long been considered a cult figure in the cryptocurrency community. "When Vitalik talks about blockchain, Stanford professors take out notebooks and start writing down," - this is how Sberbank CEO German Gref presented Buterin in 2016 at a forum in Davos.
Some cryptocurrencies "shoot" unexpectedly for their creators. The popularity of the "meme" cryptocurrency Dogecoin (the name refers to the Internet meme Doge with a Shiba Inu dog), which came to her after a flash mob on Reddit, shocked its creator Billy Markus. He himself left the project a few years ago and therefore could not get rich on the tokens that had risen in price in 2021.