#Write2Earn Matt Levin wrote a 40,000-word article titled 'The Story of Cryptocurrencies' in Bloomberg Businessweek, which included a deep examination, analysis, and explanation of a topic that stirs division in modern finance: crypto. Where did it come from? How does it work? Is it a scam? Where will it take us? Did I mention that the article is 40,000 words long and you need to read it in full? But if you want to read just some highlights, databases are an essential part of our lives.
Levin started his article by saying that 'modern life consists largely of inputs in databases'; from money to housing to personal identities, almost everything about you can be categorized within a database like those controlled by banks, governments, and companies. This is important because Bitcoin and all subsequent cryptocurrencies are essentially databases.
Cryptocurrencies do not rely on trust
Since we rely heavily on databases, we must trust the institutions that control them. But after the financial crisis in 2008, many lost trust in these institutions and especially in the banking sector. Then came Satoshi Nakamoto, who wrote (or they wrote) the guiding document known as the Bitcoin white paper, from which the first cryptocurrency emerged, indicating how to manage a shared database relying on 'encrypted proof instead of trust.'
Businessweek
Ten takeaways from Matt Levin's article 'The Story of Cryptocurrencies'
An in-depth article written by top financial writers on a topic that divides the financial world and may impose itself on the sector.
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The Bitcoin logo outside a cryptocurrency exchange kiosk in Istanbul, Turkey - Source: Bloomberg
The Bitcoin logo outside a cryptocurrency exchange kiosk in Istanbul, Turkey - Source: Bloomberg
Source:
Bloomberg
Matt Levin wrote a 40,000-word article titled 'The Story of Cryptocurrencies' in Bloomberg Businessweek, which included a deep examination, analysis, and explanation of a topic that stirs division in modern finance: crypto. Where did it come from? How does it work? Is it a scam? Where will it take us? Did I mention that the article is 40,000 words long and you need to read it in full? But if you want to read just some highlights, they are as follows.
Source: Getty Images
Source: Getty Images
Databases are an essential part of our lives
Levin started his article by saying that 'modern life consists largely of inputs in databases'; from money to housing to personal identities, almost everything about you can be categorized within a database like those controlled by banks, governments, and companies. This is important because Bitcoin and all subsequent cryptocurrencies are essentially databases.
Cryptocurrencies do not rely on trust
Since we rely heavily on databases, we must trust the institutions that control them. But after the financial crisis in 2008, many lost trust in these institutions and especially in the banking sector. Then came Satoshi Nakamoto, who wrote (or they wrote) the guiding document known as the Bitcoin white paper, from which the first cryptocurrency emerged, indicating how to manage a shared database relying on 'encrypted proof instead of trust.'
Slowly.. cryptocurrencies do actually rely on trust
Levin wrote, "Cryptocurrency is a means of rejecting societal institutions, a means that is not based on trust and resistant to censorship," he added, "But it quietly exploits the deep reservoir of trust in these institutions." According to him, "Trust in institutions is so strong and stable that all the noise of cryptocurrencies has failed to topple it. Cryptocurrency supporters shouted: 'Not your keys, not your coins, put your trust in verifiable tokens.' People heard this call and responded: 'Yes, that's true, but I'm busy, so I'll trust those nice strangers to take care of my bitcoin.'
Yes, you can create your own cryptocurrency
Since you don't need permission to create cryptocurrencies, why not create your own currency? 'The simplification of Bitcoin is extremely simple' works as follows according to Levin:
1- You can create a randomly tradable token.
2- If you do that, people could pay money to buy it.
3- It's worth a try, isn't it?
This is how you get a currency like 'Dogecoin,' which features the 'Doge' meme, and many other currencies of questionable value.
Skepticism about the appeal of 'Bitcoin' as a financial asset
The value of the first cryptocurrency was originally zero dollars, then it peaked last year at 67 thousand dollars, only to fall back to 20 thousand dollars. Due to the sharp fluctuations in the value of 'Bitcoin', it is a risky investment and its outcomes cannot be predicted. It has been promoted as a means to diversify an investment portfolio and protect against inflation, but Levin says it has proven to be 'largely correlated with the stock market, especially tech stocks,' and it has 'not provided a notably effective hedge against inflation.'
Cryptocurrencies cannot avoid the real world
You own bitcoins, and at some point, you will want to use them for a specific purpose, perhaps to buy a sandwich or real estate or yachts. Levin said: 'No financial system can be self-sufficient; you must be able to convert your money into actual things.' This means dealing with intermediaries and even with governments.