"Crypto Money" for Beginners
One of the most popular agenda items in recent years is cryptocurrencies. These new currencies, which came into our lives about 8-9 years ago, have been developed silently for a while, but have attracted a lot of attention from everyone from heads of state to giant investment companies for a few years.
What is Cryptology?
When talking about cryptocurrencies, first of all, it is useful to clarify what "crypto / cryptology" is. Cryptology is a science of encryption. Encrypting data such as text, numbers or messages according to a specific system; sent to the recipient through a secure environment; With the decoding of this encryption system, we can explain it as the process of emerging data.
What is cryptocurrency?
Crypto money is a digital and virtual currency that uses the science of cryptology in terms of security. They are encrypted based on mathematics. In fact, we have been using these funds for years in our bank cards, virtual cards or every transaction we make in the virtual environment. We were spending money virtually without physical money coming out of the banks' vaults, and in a way, these coins were cryptocurrencies. Because only numerical changes occurred in the systems. We can say that the new generation crypto money basically works with this logic. The main reason why it attracts so much attention and is loved compared to other currencies in the world is its organic structure. In other words, it cannot be managed by any government or central authority. Yet. This makes this currency more secure.
How did cryptocurrencies first come about?
We know from the history books that the basis of the monetary system we use was revealed by the Lydians. So how did crypto money first come about? This is probably one of the biggest secrets of the internet world right now: “Who created the first cryptocurrency, bitcoin? [video]
As the founder of bitcoin, all sources point to the name "Satoshi Nakamoto". But the interesting thing is that who or what this name represents is unknown. In other words, Bitcoin, which we can call the ancestor of crypto currencies (because it is the first and most adopted crypto currency), is an open source software developed by a person or group using the pseudonym Sahoshi Nakamoto. Although there are many rumors circulating, it is currently unknown who or who is the equivalent of this name.
How is crypto money produced?
We mentioned that the coins are not tied to a central authority or government. The production of these coins, just like their assets, has a completely user-based model. First thing we need to know is that every cryptocurrency has a certain production limit. Taking bitcoin as an example, the first published protocols only contain 21 million bitcoins available. So there is a limit in terms of production. For this reason, the demand for this money is increasing day by day; because it is getting harder to find and breaking down into smaller pieces.
Going back to the production process, the crypto money production process is literally in the form of mining. In other words, just like digging to find gold, math problems are tried to be solved by software to find crypto money. Since everyone has the right to solve and produce, we can say that the one who works the most produces more. Yes, you can also be one of these manufacturers if you have the necessary technological systems (mainly processing power and internet connection).
Is crypto money safe?
We can say that crypto money is fundamentally safe, especially since it cannot be managed by a central authority. The biggest risk is that your mines, namely cryptocurrencies, in your physical computers can be lost as a result of the crash of these computers if they are not transferred to a virtual wallet. Another threat is hacking. Due to the transaction volume of over billion dollars, cryptocurrencies can receive a lot of attacks.
The foundation of the security of cryptocurrencies is based on a technology called "blockchain".
What is a blockchain?
Its technological definition is "a distributed database providing encrypted transaction tracking". Blockchain, which is mostly known with bitcoin, is actually a technology that can be used anywhere there is "data". While blocks in Bitcoin contain information about cryptocurrency exchange; As another area of use, it may carry the smallest medical information of patients in the health sector. Since this system is used in blocks and distributed, it becomes impossible to track it. The information from you cannot be accessed, managed or directed by anyone until it reaches the other party and the codes match and this information is revealed.
Considering the blockchain technology used in bitcoins, information on the exchange of money is carried on the blocks and the accuracy of each transaction is provided by problem solving miners to earn "bitcoins". Thus, the correctness of the process is confirmed.