Why cryptocurrency matters?
According to Coinmarketcap.com there are over 5700 cryptocurrencies available in the market in 2020 with a combined market cap of over 270 billion US dollars. In addition to that, new cryptos are created and released in the market often. Furthermore, an increasing amount of news regarding cryptocurrencies are released on a daily basis. One may ask why are these digital assets so trendy and how do they attract so much attention? Well, cryptocurrencies are important not only because they represent a digital way to make transactions. In fact, the reasons why cryptocurrency matters go far beyond that.
The technology behind cryptocurrencies is one of the reasons why cryptocurrency matters
Cryptocurrency is in fact a very misleading word, because it implies that we are only talking about a form of digital money. Of course, multiple people see a huge value in cryptocurrencies. Some see means of performing digital transactions in a decentralized fashion, democratize financial services, and increase the power and freedom of individuals over central banks. Others would argue that cryptos are more secure and harder to produce than fiat money, therefore being potentially more valuable. However, while decentralized digital transactions and storage of value are one of the possible uses of crypto coins, the technology behind most cryptocurrencies is in fact what is most valuable and promising.
This technology behind most cryptocurrencies is called blockchain. Imagine a huge database system that is decentralized, diffuse, unable to be changed retroactively, where new data can be registered but previous data cannot be erased. That is what a blockchain is in essence. Regardless of its variations, a blockchain is in general a decentralized network system that allows the registration of information after peer-to-peer confirmation using a distributed ledger. The system is designed in a way that everything that comes downstream to that register cannot affect the record of the original register itself (more details about how a blockchain works can be encountered in a different post).
It is easy to imagine how a blockchain system can be useful in different aspects of the economy and practical life. Given the fact that the block of information is essentially permanent after being added to the blockchain and cannot be affected by future registers, a blockchain becomes a valuable source of reliable data.
Some examples regarding the utility of a blockchain
- Registration of Patents
- Registration of Contracts
- Maintenance of Legal records (birth certificates, marriage certificates)
- Maintenance of Medical records
- Ownership of properties such as real estate, cars
The possibilities go way beyond that, these are just some of the examples.
As time progresses, we are likely to see an increasing use of blockchain technology in more aspects of our practical life. This suggests that cryptocurrencies, in addition to being a means of exchange and potentially of securing value, are a way to price the potential importance of the blockchain technology behind them. That is one of the main reasons why cryptocurrency matters.
Over time we plan to talk about different aspects of the blockchain technology and its uses, and different types of cryptocurrencies available in the market. Join us in this journey.