What are cryptocurrencies?
Cryptocurrencies is a digital currency, based on Blockchain technology.
What is Blockchain?
It is a decentralized and distributed database in the open source model in technology peer to peer (P2P) internet network with no central computers and no centralized data storage space, used to record individual transactions, payments or journal entries encoded using cryptographic algorithms. In essence, blockchain is a specific decentralized and distributed transaction register or in other words it is a decentralized transaction platform in a distributed network infrastructure. Blockchain is a public register that anyone can have access to. The block is extracted cyclically (in the case of Bitcoin it is 10 minutes).
Each data block contains a specified number of records with transactions and has a maximum capacity of 1 MB. Excavated blocks are involved in transaction processing and miners are currently rewarded every 10 minutes with 12.5 BTC. The future production of the bitcoin will be slower, because the process doesn’t look the same and blocks are bisected. In the past it was 50 BTC, then 25 BTC and now is 12,5 BTC - reward for mined block. More miners mean higher difficulties in minining. Increasing the difficulty causes that the consumption of electricity increases.
Bitcoin supply is limited. It amounts to 21 million pieces and is slowing down with time. Demand for Bitcoin is growing worldwide. Its record price, the so-called ATH (All-Time-High), was recorded in December 2017 - 20,000 USD.
Nowadays, January 6, 2019. this is how the prices of TOP 10 cryptocurrencies form.
(source: http://coinmarketcap.com)
However, investing in cryptocurrencies is very risky because the cryptocurrency rates are very dynamic. What does this mean in practice? By investing 100 USD in December 2017, the loss would be 80 USD today. By investing 100 USD in 2009-2011, when the price for one Bitcoin was 0.05 USD, you could purchase 2,000 BTC. Today, the value of 2000 BTC is 8 129 360 USD, despite the 80% drop in price from December 2017.
3. Transactions
Transactions are digitally signed using public key cryptography and are public, although users are anonymous. Transactions are dispersed, which means they are not monitored by the main intermediary. They are processed by computers in a peer-to-peer network that does not verify transactions by using central computers. Transactions are called nodes and after validation, added to the replicated and time-stamped transaction log called a block. Transaction processing is not free.
4. What is a public key and a private key?
When creating a wallet for cryptocurrency, we generate two keys: public and private. We can give the public key to the other side of the transaction, which sends funds to this address. The other side must have its private key to send funds, which is used to confirm the transaction and should only be held by the owner of the funds.
5. How was Bitcoin created?
In 2009 Satoshi Nakamoto created a cryptocurrency and proclaimed his manifesto. The date of the manifesto published by Sastoshi Nakamoto is not without significance. October 2008 is the time when the US financial crisis was gathering its biggest harvest. The collapse of the Lehman Brothers bank and the crash on NASDAQ caused panic in the largest financial markets around the world. The economic collapse in the US soon knocked on the door of economies around the world.
6. What are the advantages of Bitcoin?
• Blockchain technology is resistant to cyber-attacks, because security is ensured by cryptography,
• Blockchain technology based on an encrypted cryptographic structure, does not need any intermediary institution, verifying data from the transaction or confirming its participants, thanks to which its operating costs are incomparably lower with other systems, and the gigantic efficiency,
• Due to dispersion and decentralization, it is resistant to all kinds of IT system failures,
• The blockchain register is public, anonymous and is not subject to control,
• Safety,
• Decentralization,
• Publicity,
• Transparency,
• Anonymity,
• Independence,
• Authentication (authorization).
7. What are the disadvantages of Bitcoin?
In the cryptocurrency world, we are also exposed to hacker attacks. In the case of losing our private key, any person may become the owner of our funds. You can protect yourself from this by creating difficult (multi-character) passwords with special characters, using double verification using: Google Authenticator, SMS or e-mail (which is also worth securing with Google Authenticator).
8. Adoption
Blockchain technology has many potential and diverse applications in many industries. The first of the blockchain applications are cryptocurrencies. The blockchain system is based on, among others, protocols: bitcoin and ethereum. The first application of blockchain technology was the launch of bitcoin cryptocurrency in 2009. Its potential usage lies in the Internet of Things (IoT).
Still other applications are:
• stock exchange transactions without intermediaries and institutions,
• land and mortgage registers, excluding a notary and land and mortgage register courts,
• trading in electricity to prosumer-recipients, without intermediaries,
• register of car owners and purchase and sale history as well as their insurance,
• accounting books
Bibliography:
https://pl.wikipedia.org/wiki/Blockchain
https://bithub.pl/artykuly/10-lat-manifestu-satoshiego-nakamoto/
Questions:
1. Have you ever invested in cryptocurrencies?
2. Do you think that cryptocurrencies are still a good investment in the long term (5-10 years)?
3. Do you think that cryptocurrencies can replace fiat currencies (FIAT) such as PLN, EUR and USD in the future?
4. Where else would you see the use of blockchain technology in addition to the cryptocurrencies listed above?
Comments
2. I'm not a financier, but in my opinion yes but I cannot say it fo sure.
3. I guess yes. Some day it may probably happen. I'm feeling that in the nearest future there are going to be some changes in the way how countries do their business. Perhaps, it will be obvious that having decentralized currency would be better.
4. I don't know much about blockchain technologies therefore I can't give sufficient answer.
I think it’s bad investment because cryptocurrency market controlled by several persons, who have most of the cryptocurrency and they can easily change price of it. Also the main cryptocurrency – Bitcoin - dropped in price almost in 5 times, so many people lost their money. It hard to predict cryptocurrency behavior even for tomorrow, so how we can predict behavior for long term?
I think that fiat currencies will be replaced in the nearest future , but I’m not sure with what it will be replaced : cryptocurrencies or common electronic payments with plastic cards(or NFC).
I’ve heard, that some game developers created a game using blockchain.
I think good start will be adding ability to pay in bitcoins as a default payment everywhere and after few more years of stable work maybe it will take lead in the world economy.
I have invested in Lisk. Got some more money then invested, but it's too unpredictable for me.
I am not an expert and I believe judging the future by reading some articles isn't enough, so I can't say how long and how well this market will be. The idea seems to be good and practical.
I don't think that governments will go with this. The blockchain technology is a classic bubble I think. Recent years were full of new courses, frameworks and prophecies but the fact is there are not many successful blockchain use cases, because they don't really solve the cases so much better. IBM is pushing very hard into this direction and I think it's just money. I worked on a blockchain project, which was a research, and the technology was purely chosen because there was a guy who said something like this 'We heard blockchain is safe and good. Could you develop a network for us?'
Blockchain is useful, but I think people still need some time to recognize its market value and possibilities.
I don’t think that cryptocurrencies are good investment because first of all the hype has gone, secondly most of disadvantages has been discovered. Anonymously is not so good as we used to think. You may use cryptocurrencies to illegally buy weapons, drugs, etc. There are a lot of options how to find who pays and who receives money but with all those huge amounts of data it’s becoming harder and harder each day.
No, cryptocurrencies won’t replace flat currencies in the nearest future. Most of the reasons are given above but one more and the most important to my mind is that most of people can’t understand how it works and it’s not material. That is the biggest reason why cryptocurrencies won’t replace anything in the nearest future but in a few decades…
Yes I have but fortunately a small amout unlike my friends.
2. Do you think that cryptocurrencies are still a good investment in the long term (5-10 years)?
It is really hard to say but in my opinion it may be worth it. Now cryptocurrencies are cheap comparing to past 2 years. They can rise this or the next year aso it might be a good moment to invest.
3. Do you think that cryptocurrencies can replace fiat currencies (FIAT) such as PLN, EUR and USD in the future?
I don't think so. Today cryptocurrencies are being combated by banks and propably wont be tied to any government or financial institution’s actions.
4. Where else would you see the use of blockchain technology in addition to the cryptocurrencies listed above?
I have heard that blockchain technology would be useful in distributing electric power.
This method will connect clients directly with producers bypassing distribution companies what will reduce costs.
2. It's really hard question because their rates are very dynamic and unpredictable. So for now my answer is no.
3. I think no.
4. In processing financial transactions.
Yes, I've done investment in cryptocurrencies, mostly for ethereum. It was profitable and in good time I've quit.
2. Do you think that cryptocurrencies are still a good investment in the long term (5-10 years)?
I think it's not good now to hold it for that long. More profitable is investing on stock market.
3. Do you think that cryptocurrencies can replace fiat currencies (FIAT) such as PLN, EUR and USD in the future?
Never, nerver, never. People need fiat currencies and I'm talking about 99% of the population that don't know how to use cryptocurrencies. It was working for ages so why change it? Also fiat currencies are "physical".
4. Where else would you see the use of blockchain technology in addition to the cryptocurrencies listed above?
-stock exchange transactions without intermediaries and institutions
-land and mortgage registers, excluding a notary public and land and mortgage register courts
-trade in electricity by a prosumer-recipient, without intermediaries
-register of car owners and purchase and sale history as well as their insurance
-accounting books,
-share books.
2. I don't know. Maybe it is a good investment but for me it is more gambling rather than conscious investment.
3. I don't think so. Most (or even all) cryptocurrencies are very dynamic and their price is only related with demand on stock exchange. One day you have a Ferrari on the other day you will live under the bridge.
4. I have to admit that I don't believe a lot in the future of cryptocurrencies and I don't think that one day I will pay for my pizza using this type of money.
I think no one knows what will happen with cryptocurrencies in five or ten years. I believe there is a very small chance that they will overtake the market and social media again in the upcoming years, but it's highly unlucky.
Cryptocurrencies are good for lounder money. Actually, they are perfect to do so. I don't think that they will replace the money we use now, but in some areas or business, they may be/or are more comfortable to use.
We can use cryptocurrencies everywhere or more the system behind them rather its own! It's a very smart and powerful idea that can help to improve almost every area of our lives. Starting with shopping, ending with healthcare. I keep my finger crossed for 2019 and yet another useful tool or a service that will use cryptocurrencies for the good of humanity.
No I have not. Because of their nature cryptocurrencies are very risky investment. No one uses crypto as a real currency, after so many years. For me this is a sign of failure.
2. Do you think that cryptocurrencies are still a good investment in the long term (5-10 years)?
No I think that maybe new more modern and evolved currencies can show up(TON for example), and this second generation seems promising for me.
3. Do you think that cryptocurrencies can replace fiat currencies (FIAT) such as PLN, EUR and USD in the future?
Current cannot, but in the future I think that it should happen.
4. Where else would you see the use of blockchain technology in addition to the cryptocurrencies listed above?
I think every registry that shouldn't be modified without transaction been registered and that contains crucial info, should use blockchain technologies, because of it concepts and key values.
Most people who i know personally and we’re dealing with crypto currencies have earned money and keep them or sold about one year ago.