The World of Cryptocurrencies
Every few years, cryptocurrency returns to the spotlight with a surge in prices, and everyone suddenly wants to invest. This time, anyone with even a passing interest in computer hardware should know what Bitcoin is at some level, but how does it actually work, and when will we be able to buy graphics cards at reasonable prices again?
The first most people heard about Bitcoin was in 2011 when it jumped from being a weird experiment to having actual real-world value, reaching over $30. Then it collapsed to below $2 and many were quick to call it a Ponzi scheme. Now, early 2021 has set new record highs, topping out at $68,000 at the time of writing.
How far will it fall this time? Will the talk of investments from Elon Musk, Mastercard, and others push it to even higher highs? And why should billionaires even want to bother with cryptocurrencies? Let’s find out.
Meet the blockchain
The starting point for Bitcoin and other cryptocurrencies is the blockchain. It’s become a buzzword, but the short description is pretty drab. The blockchain contains an open ledger of all transactions that have ever taken place on a given cryptocurrency network. Did you send money to Uncle Theo, paying him for a graphics card? It’s in the blockchain, for everyone to see. So, when your friend comes by claiming you never paid him back for the concert tickets, or the fast-food stop, or whatever, you can find incontrovertible proof – one way or the other.
That might sound interesting, but it probably sounds alarming, too. Why would you want everyone to be able to check on what amounts to your digital bank account? That’s where the second part of the blockchain comes into play: All transactions are at least somewhat anonymous. Unless you publicly list your Bitcoin wallet address – and it’s trivial to create more
