Cryptocurrency: Explained For the Layman and the Average Joe
What is a Cryptocurrency? What is a Cryptoplatform?
Why the hell should I care?
I’m going to attempt to explain these topics in “non-technical” terms. Well rather, as “non technical as possible” terms. Given the subject I may have to throw in some mumbo jumbo. Now, my understanding on this subject has come from online videos, articles, and discussions with friends. Consider my stance a formally uneducated one. If anything is wrong in this article please do not hesitate to call me out, so I can clarify my understanding!
Cryptocurrency, you say?
Sooooo, since you are all reading this on a website that uses block chain technology and has its own built in cryptocurrency, I’m going to assume you already understand what it is. So I guess this section is for those who are entirely unfamiliar with cryptocurrencies!
Today, when you want to buy something. You usually pay with paper money or with a credit card (which represents the paper money that you have). That paper money is not backed by anything tangible, just people’s faith in it. In essence, it’s a fancy piece of paper with some dweeb’s face on it. It used to be back by gold, but that all ended in 1971-73 when the U.S. decided to wean itself off the gold standard. What was the reason you might ask?? That’s up for debate. Now what we have is a “Fiat” monetary system.
Fiat money, is money that is not backed by anything in particular. It’s an entire system based off of the notion of “It’s legit because I say it’s legit”. Not only that. But people can move this money about on their own accord without anybody else knowing AND it is just printed from a machine. Pretty convenient system for those who own those machines don’t ya think?
^I assume the Federal Reserve looks something like this^
This is where the all mighty cryptocurrency comes in. You see, cryptocurrency comes into existence through a process called “mining”. Think of it like mining for gold… except gold is an algorithm. And instead of a pickaxe, you are using a computer. Once you mine the gold (find the answer to an algorithm). You are rewarded with a little chunk of gold. And a bigger chunk of gold gets released to the society. Most, but not all, cryptocurrencies have a set amount of gold(algorithms) that can be mined. Which prevents inflation. Cool!
Another beautiful thing about cryptocurrencies is, ALL transactions are transparent AND stored indefinitely on a ledger that can be accessed by anyone, at any time. This is what is called a “Block chain”. A block chain is a recorded chain of blocks of information that are readily, and instantly, accessible by anyone. So during WW2 when Hugo Boss was making the uniforms for the Nazis, we could all see that and boycott Hugo Boss for being pricks. It brings back a sense of responsibility to corporations to spend their resources wisely, or they will likely suffer the consequences appointed by their peers.
Crypto-Platform
I’m kind of making this term up. I think it does a good job at helping to understand the significance of block chain technology. So in the same way cryptocurrency can revolutionize our monetary systems. Taking the idea of this “block chain” and applying it to other sectors of civilization, is equally as revolutionary.
One company that is doing a fantastic job of applying this technology is Steemit! Steemit Is decentralizing social media. This is important for a number of reasons.
1. Who wants their posts censored because of “controversial” information? That is the point of “social media”. To discuss things, right? It also provides monetary incentive for having meaningful conversation and original ideas.
2. Instead of being a community ruled by the perceptions of its creators. It creates a community ruled by the collective pursuit of knowledge of its users.
3. If "advertisers" want to advertise a product on the site... They better come up with a damn good reason that is actually valuable. Otherwise, they wont get up-voted. Nobody sees their junk, and they go out of business.
^Coincidence? I think not!^
Another incredible company that is pushing the envelope of this technology is Ethereum. Ethereum is taking cryptocurrency to an entire new level. Instead of just saying “here is a crypto currency, figure out what to do with it” they have created a platform in which anybody can create decentralized applications. The base currency for these applications is a cryptocurrency called “Ether”. Like Bitcoin, "Ether", is a cryptocurrency. Unlike Bitcoin, Etherum has presented us with a platform for creating an entire ecosystem in which the "Ether" can be spent.
What the fuck are you talking about? So let me try to explain this. What were the core ideals that created the United States as we know it today? I think they are pretty well outlined in the Constitution. So, What went wrong? The only thing backing the constitution was a bunch of greedy humans. How do we fix this problem from constantly reoccurring? Imagine a new constitution, where the rules are clearly outlined and coded into a computer. If somebody were to try and stray away from the rules of this new constitution, the computer simply wouldn’t allow it. That is the power of these technologies. It could potentially eliminate the possibility of corruption in all sectors of society.
Now before you go full Terminator on me, remember this. A computer can only do what we program it to do. Plus, if shit did hit the fan... we can always pour some water on it. Assuming there is still water on the planet by the time this technology gets fully implemented. I guess there is always spit.
^Ethereum logo, lookin all sweet^
Why the Hell Should I Care?
Idk. The end.
Just kiddin.
Check this out… Does it annoy you that you have been brought up in a society that makes it EXTREMELY difficult to flourish? I mean, if you grow up poor, chances are, you’re going be poor for the rest of your life. The reason? There are centralized institutions in place that keep wealth stagnant AND directly profit for keeping the masses dumb and poor. How the fuck did this happen? What if your life could be improved based on your qualities and skills alone, regardless of circumstances? Well, doesn’t that sound just airy fairy.
Do you think it is annoying that you are constantly fed this stream of shitty music and celebrity gossip, that can actually make you feel like you are devolving from the mere act of observing? Through the current system, we have created a culture that financially rewards stupidity. Stupidity means attention, attention means money. There is currently an incentive to be as idiotic as humanly possible. Can we end this?
This is the reality that is possible through decentralizing the internet, currency, government, and implementing block chain technologies. Through the proper implementation of block chain technologies, we could usher in an entire new era for humanity. One where wealth can be accrued, instantly transferred, and properly stored by anybody. It would provide an incentive to cultivate the more positive aspects of humanity.
With this technology we could create a truly representative democratic society, where everybody’s opinion counts, and all votes are transparent. The possibilities are endless! What an interesting time to be alive. This is some exciting shit!
~feels~
So, I am noob.
Can you explain to me where the money comes from?
I can grasp that STEEM is another cryptocurrency which is limited in amount.(There are somekind of algorithms which dictate the max amount. Miners keep mining them (the algorithms(blocks)). So what is the other bigger part that gets released to the public?
Alright, we have some cryptocurrency, but what gives it the value? Why should someone with dollars invest in BTC which has no market to begin with? I can undestand that we could use this cryptocurrency as money, but how do you decide how much one answer to an algorithm worth is?
And how does STEEMIT work? I know I can mine Steem, but where does the money come from while posting, voting etc. That's what makes the least amount of sense to me.
I think what you are trying to ask is "what is the origin of money, and how does money get it's value?". This is a question that people have spent there entire lives trying to figure out... Here is my answer. Money is nothing. Money is everything. How can that be?
If I have $1, but I am the only person in the world, does that dollar have any value? No, you minus well burn it for warmth. Now, say there are 2 people in the world. Me and Chris. if I have $1, and Chris will accept that dollar in exchange for a slice of bread. Then that dollar becomes valuable. So in essence "money" is the faith that the collective majority of people have in it. Pretty strange, huh?
As for the origin of money... Currently, currency is just printed on paper. It only works because there are people who accept it. The reason cryptocurrency is revolutionary, in my opinion, is because it is backed by 1 exact number. That exact number is always attached to that 1 unit of currency. No matter where that unit of currency is, it will always have the same number attached to it. Plus, anybody can see where that unit is at any given time and it is instantly transferable anywhere, without the use of a middleman (bank).
Does that help shed some light? @sulev
I get that. The problem with paper money is that it can be printed more and more at will.
If we only used BTC for example, its value wouldn't change because there is a constant number of BTC in the world. No inflation or deflation is possible. OK.
Alright, so the value of cryptocurrencies is basically the same as normal paper money... there is no real value except the one we give it. Guess it's the same with gold too. What would a peasant actually do with gold? Nothing.
What I don't get is how the STEEMIT works. Where do the payouts come from? Because we as bloggers don't mine anything here.
So, with steemit, there is always "steem" being mined. When somebody up-votes your post, a portion of this mined steem gets directed to your account.
So, here is an analogy...
Imagine a gold mine... There are guys working hard all day, digging for gold. Except, at the end of the day, the gold gets distributed where the community deems is most appropriate.
This is essentially what steemit is. except the gold is "steem" and it is appropriated by the community through "up-votes".
Does that make sense? @sulev
So the miners mine Steem. They get only a small amount through mining. The majority gets directed to the STEEMIT network here and gets distributed according to our votes.
OK, thanks. Think I finally get it now.
For what it's worth, this post actually written really good. This should be on the top page, because I feel most people don't anything about how crypto or money in general works. It works well for an introductory reading before embarking to the vastness of the web to learn things more detailed.
So, thanks for the post, appreciate it!
(I know it sucks not getting any attention for long posts.)
Thank you, I'm glad you enjoyed it. It was really difficult for me to understand cryptocurrency when I was originally trying to figure it out. So, I figured I'd write this for others who are having troubles grasping the concept.
well thank you for this great post you covered the major factord in cryptocurrency and that's something helpful for the newbies
You are welcome brother. I hope you learned something, and I am glad you enjoyed it! @nanomichael
Hi! This post has a Flesch-Kincaid grade level of 6.7 and reading ease of 69%. This puts the writing level on par with Stephen King and Dan Brown.