Introduction to cryptocurrencies

What are cryptocurrencies?

Colloquially, for an ordinary bread eater, we can say that virtual currencies are a kind of new electronic cash, a risky speculative instrument, a long-term investment for retirement or a new class of digital assets with unprecedented properties. There are many applications and everyone can have their own approach. This market is young and it is constantly evolving in different directions and one thing is certain, cryptocurrencies cannot be turned off and will stay with us for a long time.

What is Bitcoin?

bitcoin

Bitcoin is the oldest cryptocurrency and at the same time the first and largest, decentralized P2P network creating a global, digital monetary system that allows the transfer of value over the Internet without the intermediation of trusted central institutions (banks, paypal, etc.). He is JanuszCoin’s great-grandfather, both systems operate on similar principles.

What is Blockchain?

Blockchain, or blockchain, is an otherwise decentralized database that is the basis of every cryptocurrency. Thanks to decentralization, the entire history of transactions and the balances of individual accounts are stored on many devices at the same time, which makes it impossible to make changes to the registry, which is the foundation of security. Each new block is added to the current chain thanks to a consensus in which all devices agree with each other about the compliance of the last transactions. The time it takes to generate a new block varies between currencies, ranging from a few seconds for new projects to 10 minutes for bitcoin.

What are Altcoins?

Altcoins, i.e. alternative cryptocurrencies, are created as separate monetary systems, very often based on the source code of the bitcoin protocol, but they are not an integral part of it. Altcoins are a natural evolution of the cryptocurrency ecosystem. They allow technology to develop in various directions, attracting users in their own unique way. JanuszCoin also falls into this category.

The Five Pillars of Cryptocurrency

To define more precisely what a cryptocurrency is and what opportunities it offers, you can use the issue of the five pillars of an open blockchain. If the project does not have any of the following, it is likely a private blockchain, controlled by a central authority and not in line with the original idea of virtual currencies.

There are blockchains that are open, public, borderless, neutral, and censorship-resistant, and there are others that are bullshit – Andreas Antonopoulos

  1. Openness – a cryptocurrency that is open, by definition, accessible to everyone. Its use does not require any permits, verification of documents, identity, address, etc. You only need to download the software and start using it.
  2. No boundaries – just like the internet which has no borders, real cryptocurrencies do not have them either. Blockchain exists wherever we have access to the Internet. When crossing the border of countries, we do not transfer cryptocurrencies, we only transfer our “PIN code”, which gives us access to them.
  3. Neutrality – this concept allows you to transfer funds from one account to another without the possibility of intercepting funds or asking additional questions. Blockchain does not evaluate accounts, people or reasons that guide us when sending or storing money – it is neutral
  4. Censorship resistance – means that there is no central institution that can block the transfer of funds from one person to another. Money is a form of communication and spending it is an expression of our interests and should not be censored.
  5. Audience (openness) – means that all transactions that take place on the network are verifiable by anyone. This allows anyone to become a social watchdog and track the complete history of money flow throughout the system. The exceptions are open blockchains aimed at the anonymity of transactions, in which the flow of funds is encrypted equally for all network users.So let’s take a few examples as a wallpaper and check if they fit into the name of cryptocurrency.

Are FIFA Coins a cryptocurrency? – NO

That’s right, these are virtual coins and it’s fun to have a lot of coins in FIFA, but it’s a currency that only has real value in the game. We don’t know how many coins are currently in the hands of all players. We also do not know how many maximum of these coins can be created. Everything is in the hands of the game developers, who can freely issue new coins. Such coins on the free market could never gain value due to their unlimited supply and very limited use.

Are “żappsy” a cryptocurrency? – NO

It is true that the żappsy are virtual, you can buy a hot dog and a frog coffee with them, so they have a more real use case. However, we still only deal with points spent by one central company, which theoretically can reset your balance with one click. It is not possible to send cookies to another user, the system can actually be turned off at any time by the owner of the chain of stores.

Is PLNy a cryptocurrency? – NO

Polish zloty is our national currency, we pay it for everyday purchases and we give it back in taxes. Of course, it is also not a cryptocurrency. While in the case of cash, it can be said that it is an open system for everyone, because everyone can use cash. However, it is in a digital (virtual) form, i.e. in the form in which the vast majority of PLN actually functions, does not fit into any of the 5 pillars described above. Apart from the fact that the bank decides whether to open an account for us, a transfer to China or the USA will take several days and cost a lot and may be blocked. But perhaps the most important issue is that the supply of PLN, just like coins in FIFA or “żapps”, is unlimited and depends on a centralized institution.

Is JanuszCoin a cryptocurrency? – YES

JanuszCoin, just like bitcoin, is based on all five pillars of open blochains.

27 January 2021

Leave a Reply

Your email address will not be published. Required fields are marked *