Sun. Jul 14th, 2024
Cryptocurrency
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Cryptocurrency has been in the financial news for a few years now . Adored by some, hated by others, they nevertheless represent an asset class that should no longer be neglected.

If you are just starting to get interested in it, this little introductory article on crypto currencies will give you the basics you need to know before you start investing in cryptos .

First, we will define the main concepts and recall the history of cryptocurrencies. Then we will discuss the main sources to inform you. We will end by listing some reference platforms for buying your first cryptocurrencies.

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Main concepts and definitions

When giving an introduction to cryptocurrencies, you need to understand the basic definitions, without needing to get into the technical. Here is a small list.

A blockchain is like a ledger that lists all the transactions in a network . The latter is decentralized and does not need intermediaries like a bank to ensure its security and authenticity. Consult our page dedicated to the definition of blockchain and how it works if the subject interests you!

It can be used to buy and sell goods or as a store of value. It differs a little from the token, which has other functionalities in a blockchain, in addition to that of currency. As for altcoins , these are tokens or cryptocurrencies other than Bitcoin (BTC) and, increasingly, Ethereum (ETH) .

Brief history of crypto currencies

Bitcoin was the first cryptocurrency to be released in January 2009 . A famous white paper (white paper) formalized the creation of the Bitcoin protocol by presenting the project in detail a few months before. A person under the mysterious pseudonym of Satoshi Nakamoto (🐱‍👤) wrote it. Until today, the creator of Bitcoin remains anonymous.

Bitcoin was created at the time of the 2008 financial crisis and increased distrust of banks . Satoshi Nakamoto’s objective is then to create a fully decentralized currency, without trusted third parties to manage exchanges and validate transactions, open to all and tamper-proof. It is therefore a question of creating an alternative system to the traditional financial system and scriptural money .

To achieve this, Satoshi Nakamoto notably had to create a system to exchange value on the internet without copying it , and therefore to solve the problem of double spending. In summary, when you transmit 1 BTC to your friend, you no longer own that BTC. Unlike an email attachment which is transmitted but always remains in your possession.

If you are interested in crypto currencies for the long term, familiarize yourself with the concept of Web3 (or Web 3.0) because if you invest in coins , it is generally on the success (or not) of Web3 that you bet. Investing in Facebook or Google in the early 2000s was like betting on Web2. Now it is a question of seeing if the revolution announced by Web3 will also take place in the long term.

Followed by the creation of Ethereum

Bitcoin not only created a decentralized currency, it also lent credence to the underlying technology: the blockchain . This is how some like Vitalik Buterin perceived the immense potential of the blockchain, while noting the near impossibility of changing the Bitcoin protocol.

Along with other entrepreneurs, Buterin therefore created Ethereum (ETH) in 2013, with the aim of doing much more with blockchain technology thanks to the arrival of smart contracts . These are computer programs, not necessarily smart by the way, that run automatically if a condition occurs. For encoders, this is the IF…THEN function. Here, the smart contract runs without the intervention of a third party and therefore fully automated.

The meteoric price trajectory of Bitcoin (BTC) and Ethereum (ETH)

Very quickly, the price of BTC rose to reach 1 dollar in February 2011, then 100$ in October 2013 📈. From 2013, price variations were subject to numerous upheavals, which persist until today. But, despite this roller coaster, the upward movement of the price is rather linear when looking at a graph since January 2009.

For Ethereum, which came on the market in 2015, apart from the bubble at the end of 2017, the price also rose crescendo (from 1 to 150 $), until the explosion from the end of 2020.

Of course, the market changes every second and we are not going to update this article every time the price changes! However, you can take a quick look at it by consulting Google in two clicks.

How to learn about crypto currencies?

There are several websites , French or English speaking, which deal with cryptocurrency news. They present the concepts evoked in a precise manner. You can also find very good quality YouTube channels , especially that of Hasheur , which popularize cryptocurrencies.

As blockchain projects are by nature very community-based, there are also many forums dedicated to cryptocurrencies , whether in French or in English. The founder of Bitcoin very early created a forum that still exists! In addition to Finance Héros articles, it can help you to dig into very specific points or to question other Internet users. On our site, you can also take a look at the crypto ranking which lists the 50 biggest projects, many of which already have a dedicated Finance Hero article.

Finally, if they were rare before 2018, there are more and more books that present Bitcoin, cryptocurrencies and blockchain. Here are two references that we recommend:

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