The Basics of Crypto and Blockchain

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From Gold to Crypto

If you truly want to understand what cryptocurrencies are, we have to start with a brief detour through history to actually conceive what the concept of money is. Don’t worry, this will be brief and painless.

Trust in a cryptocurrency is derived from the underlying cryptography. Since this is a new concept compared to thousands of years of using precious metals, it will take a bit of time until more and more people start to understand the true benefits of the new system.

What is money?

To break down what money is in its most basic form, it’s nothing more than any method to transfer some type of value (the product of someone’s labor or ingenuity) from one person to the next. Food, salt, animal hides, gold, silver, IOU coupons, and just about anything shiny—each has served as money at one time or another. This value that we call money can then be converted into all kinds of other things, such as services or products.

Obviously, money has changed its shape over the past years: from physical coins and papers to more digital versions. This transformation has been going on since before recorded history. What started off in the year 10,000 BC as the trade of basic survival goods, such as animals, salt, sugar, and so on, turned into the use of precious metals as “money” around 2,000 BC as societies grew ever more complex.