Like many of you, probably, I don’t really understand cryptocurrency. I know it’s virtual money, but why we should care about it, invest in it, or—simply put—trust it. I thought I needed to know a bit more, and you know me, I searched:
Who Invented Cryptocurrency?
Apparently, Satoshi Nakamoto is the inventor. But who knows? Really, who knows?? From what I understand, Satoshi Nakamoto is the name used by the presumed pseudonymous person or persons who developed bitcoin. Maybe there’s a Satoshi Nakamoto somewhere, maybe not. Maybe there’s an internet community that hides behind the name. In that regard, Nakamoto seems to be the Banksy of virtual money.
But what did Satoshi Nakamoto invent?
Supposedly, Satoshi Nakamoto started working on the code for bitcoin in 2007 and published a white paper on the subject of Cryptocurrency a year later titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
It’s probably time to define some words. For that, let’s take a look at what Merriam-Webster has to say.
Cryptocurrency: any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.
If I understand well, Cryptocurrency does not exist in physical form and is not issued by a central authority. It’s protected using cryptography. Bitcoin is a Cryptocurrency. That’s it.
What about the decentralized system?
blockchain: a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network.
The idea of blockchain comes from cryptographer David Chaum’s 1982 dissertation “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups.” A decade later, Stuart Haber and W. Scott Stornetta continued to work on a cryptographically secured chain of blocks. With Dave Bayer, they incorporated Merkle trees to the design—also called a hash tree, it is a “tree” in which every “leaf” (node) is labeled with the cryptographic hash of a data block, and every node that is not a leaf is labeled with the cryptographic hash of the labels of its child nodes.—which improved its efficiency by allowing several document certificates to be collected into one block.
It’s Satoshi Nakamoto whom, in 2008, was the first to conceptualize a decentralized blockchain. He also improved the design before making it a core component of bitcoin. Blockchain is described as the public ledger for all transactions on the network. Without it, the concept couldn’t be secure enough to work.
One day, we may know who Satoshi Nakamoto really is. For now, I still don’t know how to buy a Bitcoin or any other cryptocurrency.
How to Buy Cryptocurrency?
You can just go to the bank. In fact, it’s the point. But you still need a broker or a crypto-exchange to buy crypto.
According to Forbes: “a cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make them intimidating for new crypto investors.” Coinbase, Gemini and Binance.US are well-known crypto-exchange. It’s beginner-friendly but it can be costlier than buying crypto via each platform’s standard trading interface.
A cryptocurrency broker is “offering easy-to-use interfaces that interact with exchanges for you. Some charge higher fees than exchanges. Others claim to be ‘free’ while making money by selling information about what you and other traders are buying and selling to large brokerages or funds or not executing your trade at the best possible market price. Robinhood and SoFi are two of the most well-known crypto-brokers.”
To buy crypto, you’ll need to have funds in your account, and it’s preferable not to use a credit card.
In the end, I’m not sure I’ll buy some cryptocurrency soon, I need my money for more tangible matters for now. Also, I am not sure I really understand the way to buy it (too much about fees and making choices without knowing enough, I need to do some homework before buying anything), but it seems accessible.