How Cryptocurrency ACTUALLY works

Cryptocurrencies are everywhere right now. Bitcoin, blockchain, Dogecoin, Ethereum, and NFTs—everybody is buzzing about them. But what does it all mean? Welcome to this revolutionary video that will transform you from a clueless newcomer to a cryptographic genius! Let me take you on a journey. A journey into the evolving landscape of money.

In the very beginning, money as we know it didn't exist. Picture this: a time when bartering was the only way to trade. "I’ll give you my cat for your horse," one might say. But what if you didn't want a cat in return? That’s where money came in.

Stage two introduced coins. Made from precious metals like gold and silver, they held inherent value. The British pound, for example, was literally worth a pound of silver! Suddenly, it didn’t matter if I didn’t want your cat. As long as I had coins, we could make a deal. Coins brought convenience and trust.

Then came stage three: the rise of banks. With trust in the system, we no longer needed to carry heavy coins around. We introduced paper money. The note might look flimsy, but it represented real value, guaranteed by the government. It became a receipt for wealth, paving the way for modern transactions.

Now, here we are! Stage four! Financial transactions have skyrocketed to the digital realm. Online shopping is the norm, and credit cards rule the day. Money has transformed into mere entries on spreadsheets. Buying a music album online? Simple! My bank updates my balance, and Amazon's bank does the same.

But here’s the real deal—cryptocurrency! Stage five! This is where things get exhilarating. Cryptocurrencies are purely digital. No gold, no silver, no paper—just the exchange of digital assets. Imagine a massive spreadsheet tracking every transaction. This is known as a blockchain!

A blockchain is “a distributed database that maintains a continuously growing list of ordered records, called blocks.” These blocks “are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. This means it cannot be altered.

since a block can’t be changed, the only trust needed is at the point where a user or program enters data. This reduces the need for trusted third parties, such as auditors or other humans, who add costs and can make mistakes.

Why all the fuss over this new money? For starters, it’s decentralized. Every transaction gets recorded on a shared ledger with multiple copies. If I try to cheat the system, it’s nearly impossible! This widespread duplication prevents fraud. A hacker would need to trick thousands of records across the globe.

It’s a marvel! Think about it: you no longer need banks! You can make instantaneous global payments. No limits, no hassle with exchange rates, and near-zero transaction fees.

People often confuse blockchain with cryptocurrency. Here’s the truth: blockchain is a revolutionary way to record transactions. Each transaction is bundled into a block, equipped with unique identifiers. Modify one block? The entire system alerts you! It’s a fortress of data security.

Cryptocurrencies are indeed exciting! But they come with challenges too. People invest, trading dollars for digital coins, hoping those coins will soar in value. Some say these currencies 'moon'—a term for skyrocketing prices. But with over 4,000 different cryptocurrencies, the choice is daunting. Each has its unique traits! Ethereum transacts faster than Bitcoin. Cardano is seen as technologically superior.

As for me, I've invested a modest amount! A little gamble, really. This is not financial advice, just a peek into my journey in this thrilling world!