In this video, you will find a clear explanation of what crypto is in general in 6 points. Enjoy :)
1/ What's crypto?
For newcomers, it is very important to understand what a crypto is and the first thing to know about crypto currencies is that they represent a 100% electronic value.
These values are the same as the currencies we use on a daily basis, except that it is virtual, i. e. without notes or coins, and based on trust in a technology and no longer in a government or a central bank.
Cryptocurrencies can be exchanged from person to person (individual or company) on the Internet outside traditional banking networks.
Cryptos bring solutions to different points in our current economy.
They limit intermediaries such as banks and therefore reduce transaction costs
They can be used worldwide as a universal currency and are not controlled by monetary policy.
They allow anonymity while guaranteeing a high level of security in transactions.
2/ Who is at the origin of all this?
You may be wondering who and why this was invented. Well, all we know is that a man with an assumed name, Satoshi Nakamoto, is at the origin of the project and technology of the blockchain, the technological revolution that led to the emergence of Bitcoin, among others. Very attentive to his anonymity, his real identity is unknown and after creating the first blockchain, he would simply have disappeared.
Some pretend to be him, others say he is dead, but nothing has yet been verified. His identity remains a mystery.
Why was it created? Its development dates back to 2008 when the economy experienced the global subprime crisis. Disgusted and disgusted by a centralized system of banks, supported by governments, Satoshi Nakamoto then had the will to build a new economy, used by the people, for the people, where the principle would no longer be based on trust in people, but on transparency and the power of technology.
3/ What is the blockchain, and how does it work?
To know what a crypto is, you have to understand what a blockchain is. That's our third point. If we consider cryptos as a value or a good, then the blockchain is the technology that allows this value to exist, to be exchanged and not to be duplicated.
A blockchain is a fully transparent and secure information storage and transmission tool in the form of a database containing the history of all exchanges that have taken place since its opening.
Each transaction is compiled and encrypted and will be put into a block of information. This block of information will then be validated by the community and added to other existing blocks of transactions.
This database is then shared by all its users, without any intermediary (this is the interest) and thanks to this, everyone can check the validity of this chain.
4/ What is the advantage of the Blockchain?
Due to its transparency and safety, the blockchain can be used in almost any imaginable industry such as banking, industry, pharmaceuticals, insurance and health. Indeed, it can be used for the transfer of assets, whether in a monetary context or for the transfer of securities, votes, shares and bonds or objects. But it can also serve as a register and thus ensure better traceability of products and assets, as well as automation.
Imagine a ledger of accounts, accessible to everyone, unalterable, in which all transactions are recorded. That's the blockchain. And the advantage is that everything is automated, secure, transparent, and reliable.
The most interesting point here, and a concept developed by the young prodigy Vitalik Buterine, is the emergence of smart contracts. Smart contracts are an evolution of the Satoshi Nakamoto technology, which will allow the automatic execution of the terms and conditions of a contract, without any human intervention being necessary, in a transparent and secure manner. Indeed, one can well speak of revolution.
5/ Let's take an example to make this clearer,
Let's take the case of Musicoin, often used to easily explain the interest of the blockchain and its application. Think of Spotify, that company where information is centralized. Artists often complain that they do not receive money for listening to their tracks and the platform is very opaque about views, prices, etc.... This is where Musicoin wants to make a difference by integrating the process into the Blockchain.
Their principle is to create a music platform on which you can listen to all your tracks and when you listen to music, a smart-contract will automatically be activated, deducted from your account less than one cent, to send it directly to the artist, producer and platform under a planned distribution between them.
Thus, no more intermediaries, but partners, and no more need to trust the company, since the blockchain is the source of trust in our case.
6/ Are blockchains and cryptos the same thing?
Not quite. When we talk about the blockchain, we are talking about technology and transaction history, while crypto is the "value" that will be exchanged on the blockchain. What is important to understand is that the two are inseparable.
For each use of the blockchain, you will go through a crypto. Whether it is a Corner (which is a value of a platform with its own blockchain), or via a token (a kind of internal currency for a project that will use an existing blockchain).
Thus, for each project using blockchain technology, you will have a crypto of its own.
But nothing to worry about, because many start-ups are already working to make life easier for users by harmonizing usage by allowing direct conversions from one project to another. This will improve market adoption, but that is another story.
If we had to summarize all this in a few lines:
Crypto is a virtual currency, created in 2008 by Satoshi Nakamoto, which aims to limit intermediaries, be transparent, secure and guarantee the veracity and inalterability of data. All this thanks to blockchain technology.
The blockchains are indeed a revolution, and we are lucky enough to live it. All companies, banks, governments are currently studying the issue and looking for a way to move the current system towards one with a more secure, egalitarian and transparent management.