Cryptocurrencies have completely changed the financial sector, as well as the perception and expectations people have of the entities that define its parameters - from banks to governments. In just a few years, cryptocurrencies have become seriously trendy, and words like NFT, Ethereum, and wallet, have found a place in everyday finance jargon. It is said that these currencies are available to everyone, yet there is not much information available about them, and people’s general understanding is still somewhat limited. Antony Lewis aims to fill this void with this general handbook which explains all the main points you need to know.
To discuss any aspect of cryptocurrency, you need to know the key terminology, and you must understand it inside out.
The term cryptocurrency refers to any digital currency created by software, according to a well-defined set of processes and rules. Bitcoin and Ether are two of the most famous cryptocurrencies, and are based on a technology (or rather a set of technologies) called the blockchain. The connection between currency and blockchain is simple: a Bitcoin, for example, is a set of protocols expressed in the form of computer code, which defines its technical characteristics; a software program uses the code to operate the protocols, allowing the creation of blocks of data that form the blockchain. The money is produced as part of this process, through a very precise elaboration of the blockchain data, which also plays a crucial role in keeping track of transactions – and it is through this very detailed data processing that the blocks are created. The operating model of the blockchain defines the perimeter of its use. There are several operating models, including Bitcoin and Ethereum (Ether is its currency), and each of them has unique characteristics.
To understand exactly how currency is created and why it is given a value, we need to dive into economic theory to understand how money works.
