Cryptocurrencies
Money is turning into data and will revolutionize trade.
The appearance of bitcoin and other cryptocurrencies is both wonderful and problematic—much like the Internet itself.
How does a blockchain work and why are people willing to pay real money for cryptocurrencies?
The Value of Money
Fully virtual currencies have been under development for many years. In the early years of the Web, the eCash technology being developed by the company DigiCash was a talking point. This fully digital online currency was tested in the mid-1990s but ran into technological issues. Furthermore, traditional banks and credit card companies did everything they could to block the new player.
Virtual currencies have no intrinsic value. On the other hand, traditional currencies—like dollars, euros, and rubles—have no real value either. There was a time when currencies were tied to the gold standard, but this has not been the case for decades. In principle, therefore, a $100 bill only has value because we agree that it does.
Most digital currencies now in use are based on a blockchain, the most famous of which is the blockchain for the bitcoin currency. This blockchain was published in October 2008, and its author remains unknown to this day. Bitcoin promises to create an entirely new type of currency independent of other asset types, but which can be used for payments like traditional currencies. Above all, bitcoin is free and distributed—nobody controls it. It is a currency based ...
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