Since I have been writing articles on cryptocurrencies, many have been those who continue to ask themselves this question of recurring curiosity: crypto- currencies, what are they? It’s used for ? What can be different types of cryptocurrencies? Is it advisable to invest in cryptocurrencies? currencies at a time when the stock markets are experiencing a series of collapses and driving away investors? Can we read cryptocurrency trends at the end of the year 2023? In this series of short articles, we will try to answer as we can to all these questions to allow a basic understanding in the field of these virtual currencies.
The most popular cryptocurrency is undoubtedly bitcoin. He is known like cryptocurrency because everyone talks about it every time there is invocation of cryptocurrency. Despite this “starization” of bitcoin, few people really understand what cryptocurrency really is, also known under the name of digital currency, virtual currency or electronic money. Here we will also clarify the difference between crypto and classic currencies and assess their value. So what is virtual currency?
Cryptocurrencies are nothing other than private money. It simply means that it is a currency which is not issued by a classic monetary authority such as a central bank or any other financial institution or a any government. Virtual currency is therefore issued in a manner decentralized. This is why they are considered currencies alternatives.
The issuance of these cryptocurrencies is done using blockchain technology and are controlled by a code, secured by cryptography, which makes them inviolable. It is practically impossible, let’s say difficult, to break the code and all data protected and stored in a vast accounting book open to all. Numerous frauds and scams of all kinds that threaten cryptocurrencies do not manage to reach crypto in themselves but rather wallets by which they are held.
Even if since the 2017-2018 bubble, there has been a slowdown in the creation of cryptocurrencies, more than 2000 cryptocurrencies were created after the creation of bitcoin in 2009. Cryptocurrencies have various varieties of purposes.
An alternative to real currencies which would make it possible to purchase goods of classic consumption like bitcoin. There are many platforms, were created for these transactions. Like Overstock or Shopify allow you to purchase, using tokens held in your virtual wallet, foodstuffs, beauty products, computer equipment, etc.
An alternative to venture capital. The case of cryptocurrencies launched during fundraising of alternative funds ICO (Initial coins offering). These liftings alternative funds directly finance a project with cryptocurrencies. These innovative projects for the most part are developed by crypto financing and this are tokens and tokens that are used. They are generally intended to order products or services. They are always used to acquire the products and services once it has been developed. And finally, what is value of a cryptocurrency?
The value of a cryptocurrency is made above all by its popularity and the use that people do it. A cryptocurrency increases in value when it is held by many people. When even more people use its tokens to purchase goods and services.
Cryptocurrencies represent 10% per year of very large payment services lucrative businesses that are exploding thanks to the continued growth of digital commerce. He It must be said that the growing place of digital currencies which will soon imposing these virtual currencies as a means of payment also contributes to this.
The network effect is central to the value of a cryptocurrency. Like its value is closely linked to the number of its tokens in circulation and users who use them. serve, the network becomes the fuel for the power of its value. That is why the network effect is very beneficial to GAFAM. The GAFAMs have a very large number of users and therefore they have every interest in linking themselves to virtual currencies in their exchange system to sell their goods and services. Facebook by example have 2 billion users. No bank has such a number of clients. With this quarter of the world’s population, Facebook has the potential to create its own digital currency for its users.
We talked about cryptocurrency, its usefulness in trading and its value to better understand this digital monetary system. Next time we will answer other questions.
