Crypto is an umbrella term to classify the vast ecosystem of blockchain protocols that have emerged since the creation of Bitcoin.
To begin with, it is important to understand what separates cryptocurrencies from other forms of digital assets that we encounter in our daily lives, such as loyalty points at the local coffee shop and airline reward miles. The big difference is that unlike these programs, which are run by central parties (such as companies), they do not have an underlying source of cryptocurrency. Instead, it uses a new type of database called blockchain , which can be thought of as a spreadsheet in the sky that anyone can see. Transactions are added to the blockchain by computers around the world running software that keeps the network running and secure without an administrator. These computers are called nodes.
While this fix may seem simple, it's actually a breakthrough in computing that creates a valuable resource for the first time in history: digital scarcity.
What does that mean? Well, you know how easy it is for someone to right click on an image to save it to their computer. It can then be copied and sent an unlimited number of times. If you were one of those recipients, would you believe someone if they told you they didn't send it to someone else? Even if this happens, it will be impossible to verify. Bitcoin lets you know that a digital dollar or bitcoin is unique.
Cryptocurrencies offer a way to become a digital asset for the 21st century economy. Let's start with Bitcoin.
applications
digital currencies
One of the revolutionary uses of cryptography was the electronic transfer of money using bitcoins. Consider the challenges of sending money across borders using traditional technologies. International wire transfer takes 3-5 business days with a fee of up to $70 depending on the bank. Transfer payments through money transfer companies usually take 1-5 business days and, according to the World Bank, the average fee is 6.5%. In the Bitcoin network, confirmations occur approximately every 10 minutes. Transaction fees vary based on network usage, but have historically ranged between $1 and $3.
Stablecoins like Tether, USD and DAI
Bitcoin has also become a means of storing and preserving value. Instead of holding US dollars, Treasury bills or gold, companies like Tesla and countries like El Salvador and the Central African Republic prefer to hold bitcoins. With limited supply and inflexible monetary policy, some consider Bitcoin the equivalent of 21st century gold .
smart contracts
ethereal:
While smart contracts first appeared on Ethereum, new protocols such as Solana also emerged.
Decentralized applications and organizations
There are currently more than 3,000 decentralized applications using smart contracts on the Ethereum network, and it's not just finance. Storj, for example, is a cloud-based storage service. Another example, the Basic Attention Token, uses smart contracts to increase advertising revenue for web surfers using the Brave Browser. Decentralized applications are based on smart contracts provided by the aforementioned protocols.
In addition to decentralized applications, decentralized autonomous organizations (DAOs) are another emerging crypto industry. These are companies that give voting rights or special access to their token holders. Owners make decisions by majority vote rather than allowing a small group of executives or investors to control. DAOs are created for a wide variety of purposes, from decentralized investment clubs to managing credit protocols.
indispensable signs
While cryptocurrencies are fungible, meaning that each unit is the same as any other unit, non-fungible tokens (NFTs) are unique. They can be used to represent and verify ownership of individual assets, whether digital or otherwise.
NFTs allow artists to bring their digital works directly to consumers. Traditionally, art dealers, record companies, book publishers and other intermediaries appropriated works and paid the author only 15% of the profits. By creating digital artwork, forming it as an NFT and selling it directly to consumers, the artist can transact directly with the end buyers. The property is registered on the blockchain and runs on its own infrastructure, removing middlemen from the process. NFT marketplaces like OpenSea or Blur allow you to produce and sell artwork, photos, collectible avatars, music, digital wallet domain names, and more.
The future of cryptocurrency
Cryptocurrencies could revolutionize the way we interact with the Internet. This is commonly known as Web3. In Web2, as it's known in its current iteration, Internet companies like Facebook and Google make money by selling ads or user data. In Web3, the infrastructure is based on blockchain and cryptocurrencies, not business systems. This allows consumers to participate in the cash flow that big tech companies are now buying and better protect their personal data.
Cryptocurrencies also play a role in the meta universe. Imagine if every property in a popular digital realm like World of Warcraft was a unique NFT. Player properties and items will have market prices set by users who want them. In-game money will be scarce and its value will increase as more users join the network and want to buy money to purchase virtual goods or services. Unlike playing on a company's server, crypto allows you to get a true meta-universe where users own parts of the digital world.
While we have outlined some of the past and potential applications of cryptocurrency, the truth is that no one knows where this technology will take us. Most people don't expect some of today's killer web apps to be able to summon cars or look like a stranger on their smartphone. The first example of product customization in the cryptocurrency market was the decentralization of money and finance. The next killer app may be something completely unexpected.