Cryptocurrency Explained reveals the must-knowns regarding digital currencies.
The interest in cryptocurrencies has increased due to the depreciation of the Turkish lira and the withdrawal of some foreign money transfer companies like Wise from Turkey, which has led to a decrease in confidence in the economy. With the bull market season coming, we will talk more about cryptocurrencies this year.
According to the GlobalWebIndex (GWI) research, Turkey has the highest rate of investment in crypto in the world. Therefore, I believe that cryptocurrencies will become more widespread in Turkey and will be used more in sectors suitable for blockchain solutions such as foreign trade. If this is the case, it would be beneficial for Turkish people to get to know cryptocurrencies better, so I decided to write this article.
1) What is Cryptocurrency?
Cryptocurrency, derived from the term “crypto,” is a digital currency designed using cryptography, a branch of mathematics, to secure transactions as a medium of exchange.
Cryptocurrencies operate through a distributed, publicly available ledger called blockchain, which records all transactions updated and held by the currency holders.
That being said, Traditional online payment systems are owned by banks and financial institutions, where these institutions keep your money safe for you. When you want to spend your money, you need to request these institutions to transfer your money on your behalf. However, in cryptocurrencies, there is no intermediary. They are decentralized.
Some of the most well-known cryptocurrencies worldwide include Bitcoin, Ethereum, Tether, Binance Coin, Cardano, and Dogecoin.
2) When Did Cryptocurrencies First Start Being Used?
Cryptocurrencies first began to be used with the introduction of Bitcoin in 2009, created by Satoshi Nakamoto and released as open-source software. Bitcoin laid the foundation for other cryptocurrencies. While some of these cryptocurrencies use the same software, others utilize different software.
3) How Did Blockchains Appear?
Blockchain was initially described by a cryptographer named David Chaum in his 1982 doctoral dissertation. In the crypto world, blockchain operates as a public ledger of encrypted transactions, maintained and updated on computers worldwide. While these transactions are anonymous, they are accessible to everyone.
4) How are Cryptocurrencies Produced?
Cryptocurrencies are produced through a technique called mining. Crypto mining ensures the operation of the cryptocurrency network and creates new cryptocurrency units. In addition to mining, production methods such as Proof of Stake (PoS) and Proof of Concept (PoC) are also quite common.
5) What is the Difference Between Cryptocurrencies?
There are differences among cryptocurrencies. Some cryptocurrencies are more secure than others. Some are faster, some offer more privacy, and some are programmable.
6) Where are Cryptocurrencies bought and sold?
Cryptocurrency trading platforms, where cryptocurrencies are bought and sold, are referred to as cryptocurrency exchanges. The country with the most registered cryptocurrency exchanges in the world is the United Kingdom. It is followed by Hong Kong, the United States, Singapore, and Turkey.
According to market trading volume, some of the world’s largest cryptocurrency exchanges are as follows:
7) How is the Value of Cryptocurrencies Determined?
The value of cryptocurrencies is determined by the supply and demand balance in the market. Cryptocurrencies are usually distributed based on maximum supply. The higher the demand for a cryptocurrency, the higher its price will be. If there is low demand for a cryptocurrency, its price will decrease. Cryptocurrencies, like stocks or commodities, appreciate or depreciate in value during exchanges based on real-time supply and demand pricing. Those interested in trading in this market should join platforms called cryptocurrency exchanges.
8) Why
Cryptocurrencies?
- Decentralized: You don’t need permission from any institution or pay them to use your own money.
- You Control Your Money: No one can restrict or block your use of cryptocurrency. Other centralized payment services like banks can freeze your accounts or block transactions based on their service policies and conditions.
- Secure: Due to the design of the network, it is very difficult for hackers, scammers, and other attackers to shut down the network.
- Cheap and Fast: It is a cheap and fast payment method. When you send money anywhere in the world, it reaches the recipient within seconds. You pay much lower fees compared to fees paid in international bank transfers.
When shipping abroad; I think that cryptocurrencies and blockchain solutions will be more preferred in foreign trade in the near future, as they are cheaper, faster, more practical and safer than other methods.
When making payments in foreign trade, you can find the details of ‘how to make secure payments with smart contracts’ in our Escrow article.
Author: Figen Karaaslan – Cryptocurrency Explained
