When discussing cryptocurrencies, particularly Bitcoin, many financial analysts regard it as the new gold or "digital gold" due to various similarities between these assets, including their store of value and usability. However, a deeper exploration of the cryptospace reveals a transformative technology that will reshape our perspective on the world.
Gaining a comprehensive understanding of crypto, related terms, and blockchain will provide us with profound insights into our future direction.
The term "crypto" is an abbreviation for "cryptocurrency" or "cryptographic" In which it refers to securing everything under its umbrella like information and transactions, also, it verifies the ownership of a certain digital asset through the encryption techniques. The word Crypto is the key that makes cryptocurrency secure also it refers to other technologies that use cryptography such as Blockchain and Decentralized applications (Dapps) and related concepts.
Now let’s get to know in detail about the entire ecosystem of the Cryptospace. Starting with the cryptography and its different techniques such as Encryption where it’s the process of locking a certain data and make it only readable to the authorized person, we can see the encryption in our daily life where it is used to protect sensitive files and data, credit cards details, etc.
Also and another technique in the cryptography is the hashing, where it convert data into a unique value called Hash, and creating digital signature. Where this signature is considered as a way to ensure the authentication of a certain message or document. The Digital signatures are issued or created using a private key, in where it can be verified with the public key.
Cryptography is an essential tool that it’s in a continuous development and growth due to its importance in the digital era. Since it is used in numerous applications, and its importance will keep growing in the future.
After showing the power of cryptography, herein we are going to talk about the cryptocurrency in which is a digital or virtual currency that depends on cryptography for security. It has many positive sides that make it even better from the current assets like Fiat Currency, where the cryptocurrency cannot be counterfeited because of this security feature based on cryptography, adding to that its decentralized nature since it is not issued by any central authority (Governments, Central Banks), so in a way or another it is protected from the governmental interference or manipulation. We can find most of the cryptocurrencies on Centralized (CEX) and decentralized exchanges (DEX), so we can possess them for a lot of use cases, since also they can be used to purchase goods and services in thousands of merchants in different places for now and the number is increasing.
Initially, cryptocurrency and always starting with the Bitcoin is considered as an online payment method. According to the Bitcoin white paper, so it’s creation that depends on cryptography allow this digital currency to be transferred between parties without the need for a third party or intermediary, such as a bank or any other financial company.
Historically Bitcoin was not the first ever crypto asset, yet it was the first successful one, this coin did a lot for just being a digital currency, since its first release as an open-source software, it participated in changing a lot in our traditional financial system, starting from its peer-to-peer (P2P) network that allows users to transact payments without the need for a central authority, like a bank or others. Bitcoin transactions are verified using the cryptography technique by network nodes and the transactions are recorded in the blockchain. Since the release of Bitcoin, thousands of altcoins have been created. They even use different technologies and have different features. Counting them will take days and days so we can just mention some of them to clarify the usability of the cryptocurrency.
Starting with the decentralized platform and the second biggest crypto asset the Ethereum (ETH) which runs smart contracts, and decentralized applications without any possibility of fraud and for sure without the need for third party interference. There’s also the Litecoin (LTC) which is also a peer-to-peer cryptocurrency that means it’s similar to Bitcoin, but with faster transaction processing time and lower fees. Also, we have the famous Ripple (XRP) which gained its fame after the lawsuit between the platform and Securities and Exchange Commission (SEC), this coin is designed to be easy to use, fast and low cost for international money transfers. Something like (SWIFT).
Cryptocurrency development is still at an early stage. The technology could or it will for sure completely alter the way we think about money. Payments could be made more accessible, secure, and efficient with the help of cryptocurrencies.
Spotting the light on Cryptocurrency will show us the benefits of dealing with these assets since it will guarantee the security by using the cryptography, and that what is making it very difficult to counterfeit or be exposed to hacks. Also, the anonymity which is also an important feature and useful to protect people’s privacy.
And the decentralization which free the cryptocurrencies from the government control, making them attractive to people who are concerned about government overreach.
To be fair, everything carries some risks, but these risks ultimately depend on the investor. They can take measures to prepare and protect themselves against any potential risks. Here, we will mention some of them.
One of the most known risk is the volatility where the prices of cryptocurrencies can experience extreme fluctuations, making them a risky investment. Also there is the hacking issue since many hacks occurred on the cryptocurrencies in the past, and that resulted to huge losses of funds. So always we have to take our precautions. Not less important issue is the regulations, since the governments and decision makers around the world especially in the big countries are still trying to find out how to regulate cryptocurrencies, which could lead to restrictions on their use. (Noting that these central authorities will first protect their interests).
Mentioning about the decentralization of Cryptocurrency so we will need to talk here about the Blockchain. The place where the digital assets work through.
Blockchain is a database that is considered as distributed digital ledger, where it keeps track of transactions on large number of computers on a network. Furthermore, a list of transactions is contained in each block of the chain-like structure that makes up the system, so we call it Blockchain. The effectiveness of registered data like its security and transparency are guaranteed in the first place because of the decentralization concept, and it is very challenging to change a block once it has been added to the chain.
So we need to note that the decentralized applications (DApps), healthcare, official papers like identification card (ID) and voting systems are just a few areas where blockchain technology is being or it will be used. Blockchain technology is the homeland for cryptocurrencies like Bitcoin. And it gets its power from the decentralization concept. Undoubtedly, the revolutionary technology known as blockchain and for now makes it possible to record transactions in a secure and transparent manner. Because it works as a decentralized network where numerous users, in other words, the nodes, each will keep a copy of the entire blockchain. Due to the nature of distribution, transactions will no longer need to be verified and validated by a bank or other central authority. Here each block in the blockchain contains a group of transactions. And to create the chain, these blocks are linked from one to the next cryptographically. The data in a block and the hash of the previous block are used together to create a unique identification number, or hash, for each one of these blocks. Due to the requirement of changing subsequent blocks as well, this linkage ensures that any tampering with a block would be immediately detected.
Mainly Ethereum and Blockchain networks use consensus mechanisms like proof of stake (PoS) or proof of work (PoW) to validate and decide on the sequence in which transactions are added to the chain. This consensus-building procedure ensures agreement among network users and thwarts dishonest or malicious behavior.
The Crypto-world is one of the most notable areas where blockchain technology is used. The first successful one was the Bitcoin which uses blockchain technology to allow peer-to-peer (P2P) transactions without the need of middlemen or a third party. With the additions and improvements that Ethereum made by enabling the execution of programmable smart contracts, it has even increased the functionality of blockchain.
Blockchain has the potential to change many industries in addition to cryptocurrencies. It offers advantages like improved immutability, security, and efficiency. For instance, in supply chain management, blockchain can enable real-time tracking of goods, ensuring authenticity and lowering counterfeiting. It can enable private patient record sharing in the healthcare industry. Voting systems built on blockchain technology can also improve the accuracy and auditability of elections.
As development and evolution continues on this new technology, blockchain will be able to offer a lot of opportunities on almost all sectors, since it will increase the trust, efficiency, and decentralization in many directions in our digital lives.
Collectively, all the aforementioned elements gathered to constitute the cryptospace.
Cryptospace is a term used to describe the entire ecosystem of cryptocurrency and blockchain technology. It includes everything from the underlying technology to the various applications that are being built on top of it. The cryptospace is evolving and growing quickly around us. And almost on daily basis we can find new projects are being launched, developers from all around the world are working hardly to even improve this technology more and more. This will only make it a very exciting time to be involved in this world.
So, let’s get to know more about this space starting with its history. In the end of 1980, and in the early 1990s, a group of academics and computer scientists started to develop the idea of digital currency, since than was the cryptospace first emerged.
After several attempts on different Crypto assets such as (e-gold, e-cash, DigiCash and many others) until the 2009, when Bitcoin was the first cryptocurrency to achieve real success. A number of different cryptocurrencies were introduced in the later years, after Bitcoin's quick rise to fame.
After that the price of Bitcoin and altcoins skyrocketed, causing a boom in the cryptocurrency industry. However, the cryptocurrency price crashed later on, putting an end to that boom, these were by the year of 2018. But after that and after the Covid-19 pandemic the Crypto world gain even a bigger fame resulting to an All-Time High (ATH) for Bitcoin to reach more than 68,000 USD before going down again. Despite the crash, the cryptospace has continued to grow and evolve.
In recent years, there has been a growing interest in the use of blockchain technology for a variety of applications, such as supply chain management, healthcare, and voting. This world looks attractive for investors and not only for cryptocurrency as projects but also in all the financial services provided, such as the decentralized finance (DeFi) which represent a replacement or even a better alternative for the banks or any other financial institution, since it facilitates the use of financial services without the need to go to a physical branch, with a full access to the accounts anytime and anywhere.
Just like the traditional stock market where there is the exchanges platform also in this world we can find the centralized Exchanges (CEX) and also the decentralized exchanges (DEX). Many differences can be found between these two concepts, mainly the CEX is an exchange is owned and operated by one entity that offers big range of services, like buying and selling, lending and borrowing, etc. On the other hand, we have the DEX where it’s not owned or operated by a single entity, these platforms offer similar services like the centralized ones, with additional advantages like more security, privacy and above all is the full control, since there’s no need to trust anyone like a third party.
After talking about exchanges, thus the simplicity of buying crypto, yet, no we need to be aware in order to safely buy, sell and trade these digital assets. It’s very important to research and choose a reputable cryptocurrency exchange with a solid reputation, good security measures and not less important factor which is user experience and customer support.
Since the Cryptospace is still not clearly organized before the governments decide about the regulations so we’re going to find many exchanges require users to complete a Know Your Customer (KYC) process to comply with regulations and prevent fraud. And that by providing the necessary documents and information for identity verification.
Also education and knowledge about cryptocurrencies are necessary to understand the basics of blockchain technology, different types of cryptocurrencies, and their associated risks. Stay updated on market trends, news, and security best practices.
Enabling the two-factor authentication (2FA) is a most to increase the protection of the exchange account and wallet whenever possible.
Talking about securing the wallet will even open a bigger discussion about the importance of having a wallet with its different types and natures that exist in the market, where initially we need the wallet to store the crypto assets (Coins, Tokens, NFTs, etc.) securely. The wallet here can be divided to hot wallet, where this type is connected to the internet making it easier to access for transactions, these are software- based, so that will make them faster and easier to deal with the funds, but also will be more susceptible to online threats. Then we have another type which is the cold wallet where these are known as offline wallets, because they are designed to store the assets and funds, these are disconnected from the internet, providing a better security since they are not in the face of the online threats.
And there is the hardware wallets, which are specially designed physical devices to provide high security, where the keys are offline from the internet and protected from any potential attack on the computer or mobile.
A creative concept that is already evolving the world and will keep adding changes which is the cryptocurrency mining, we already talked briefly about different types of consensus mechanisms which they are the key words for what we are going to live in the future. Where it all started with the BTC and its proof-of-work (PoW) concept known as mining where the participants or can be called miners, will compete to solve mathematical puzzles leading to validating and adding new blocks to the blockchain. This will surely need specific computational power and energy consumption to solve. Here the miners who successfully solve the puzzle will be rewarded as an incentive.
But since the PoW will need a big energy consumption that created some environmental concerns so another concept started to show which is the PoS. Proof-of-stake is another concept for the same result, so the PoS target to lower the energy consumption to the minimum levels so there will be no environmental impact. Here the miners which are the validators will create new blocks based on the coins they hold in the network and not for generating new coins by using machines as the way in PoW (mining machines such as ASIC, rigs). The more coins that the validator holds his rewards will increase by earning transaction fees. These are not the only mechanism, nowadays there’s a huge number of such concepts, such as Delegated Proof of Stake (DPoS), Proof of Authority (PoA), etc.
The whole concept is about decentralization, yet the central banks are also trying to involve through their new products the central bank digital currencies (CBDCs) which from their point of view will have role in the future financial ecosystem.
The financial system is going to change, the future won’t be as we already know and this is because of the Cryptospace. Despite the future of cryptospace is uncertain till now. But the community is still growing and all the indicators show that the space will continue to grow for the following years. We can obviously see the increase on demand for the Dapps, firstly because they are not controlled by a central authority which will give a bigger space of freedom and add more security, and another point which is the benefits of using the blockchain technology for a different application. Where blockchain technology has the potential to improve almost all sectors and industries.
We’re not saying here that “la vie en rose”, for sure it’s going to be a hard path and there will always be many issues that need to be solved before reaching the maximum power of crypto. One of these challenges is the lack of regulation, and the high volatility of cryptocurrencies. But the benefits of this world are much much more than its disadvantages and this space is very exciting to be involved in.
The potential is enormous you won’t know them before you go into it, and there is a lot of innovation happening.
No one can deny that the cryptospace is very active and improving in a fast way, so this place is able to offer extraordinary options, possibilities and opportunities for those who are willing to be part and explore it.
This space is captivating the interest of investors, tech enthusiasts, and individuals. As the digital revolution continues to redesign industries, so understanding the cryptospace is becoming increasingly essential and in few years, it’s going to be a most.
Put your seatbelt and get prepared, it’s just the beginning, the cryptospace is going to invade the earth by offering a lot of services that can make our life easier. It’s not important to substitute the traditional financial system, it can offer a hand of help, or yes, it might replace it, for now it’s all about predictions, but in all cases this new technology represented by blockchain and all what’s under its umbrella are for sure going to change the way we are living.
An important reminder, that we have always to study, learn and make our own research, especially in this world since it’s still new, so it can be dangerous for the people with lack of knowledge.
We have a big chance to finally get the financial freedom.
NB.: Do not consider this post as a financial advice, always do your own research.
