The easiest start to understand cryptocurrency is to understand Bitcoin. Bitcoin is the first cryptocurrency created by Satoshi Nakamoto in 2008. The ideal concept of Bitcoin is to have the properties of openess, borderless, censorship resistance, unconfiscatibility, distortion resistance, manipulation resistance, distribution, decentralization, and pseudo anonymous. Disclaimer that the mentioned concept is idealized and in reality may not be perfect. Also in this book contains no technical explanation about cryptography and other technologies behind cryptocurrency because this book is inteded for users only. Instead, only illustrations or parables are provided and may not be fully accurate.
Maybe you have heard about the latest Wirecard issue where one billion dollars was lost, or previous scandals such as seven billion dollars accounting error by Worldcom, Enron's hidden debt, or even the Charles Ponzi scheme back in the old days. If not, most probably you have heard of financial corruptions happening in your country or local area. I still remembered my teen days in Indonesia where there was Century Bank scandal. Nobody knows where the money went and the rich people who put their money their lost all their savings. I remember seeing the news that once a rich woman must know work as a laborer at any construction sites. Who knows if there were any that have to work as a maid or as a slave after losing their savings. I firmly believe in the absolute energy theory where energy does not disappear but transferred out. Obviously, the money did not disappear, someone must have taken that money. With blockchain technology, transactions can be securely recorded in details, preventing these kinds of scandals.
Open and Transparent
Again Bitcoin is P2P where for as long as there is a peer node nearby, you can connect to the network even if Internet is censored. Authorities can always try blocking every nodes but good luck in blocking emerging nodes daily. If you have used any Bitcoin wallet, you probably wondered why they give many warnings of not to make mistake in inputing the receiver's address. That is because the transaction is irreversible not only to prevent distortion and manipulation but to prevent censorship. If a transaction is reversible, authorities can easily demand to reverse your transaction if they do not like it.
Bitcoin maximalist may say that other than Bitcoin are scam coins, only Bitcoin is the truth, but in my opinion, that thinking will only cover one of the beauty of Bitcoin. The beauty of Bitcoin is that it is open source where anyone can reuse the code and modify. If anyone wants to build something different or just does not agree with some function of Bitcoin, then they can freely create another coin and take a different path instead of fighting to change Bitcoin which isn't that the same as war?. Then let the people choose which coins they prefer. The freedom to choose is one of the beautiful contribution of Bitcoin.
There are many other coins like there are many companies out there where you need a whole team to research them all. You can legitimately get rich buy investing into altcoin because the concept is the same that you invest in good things before anybody knows. For example I bought $70 worth Statera when I saw there post and read that they are a deflationary coin on defi and when I saw that price was still steady, I estimate that they are still early and finally my Statera once worth over $200 and sold $70 to return my capital and now I'm in profit. Also altcoins are the most dangerous investment I know because new stuffs have a high risk of not surviving for example I bought almost $100 of Inmax as a random gamble and for years they have not launch their exchange and $100 plummelled to $1 meaning that I completely lost the gamble. Also, beware of scams that anyone today can make their tokens, they could even name them Bitcoin for example if you buy these named Bitcoin token it cannot be used on the Bitcoin network because they are not the same. Therefore, always do your research first.
Government and Other Private Blockchain
The governments, banks, and companies said they are interested in implementing blockchain. You often heard they said yes to blockchain but no to Bitcoin or blockchain has value but Bitcoin does not have. What do they mean? They like the blockchain and the distributed system but they do not like the decentralization, openess, censorship resistance, unconfiscatibility, and privacy. They are in control of the global financial system, implementing Bitcoin means the same thing as giving up control such as their ability to print currency, their ability to distribute to whomever they want, and their ability to enforce monetary policies.
Correlation to Our Lives
Most of us are probably born with fiat currency or public simple term cash accepted as money which is a tool to communicate value. Simply with money you can buy anything and most of us believe that money is our primary necessity which is not true. Money is just a tool, it is what we can get with money is our true necessity. If you cannot understand that, then you lack history lesson or logic. Ask yourself a question, does money always exist in the past? The answer is no. If you go back in time and give people dollars, they would think you are crazy. Why would they give you stuffs for a piece of paper?
The oldest form of trading is barter. I need water and you need food so I trade some of my food with you to get some water. However, barter have scaling, practibility, and divisibility problem. I have food but not everybody needs much food, you have clean water but not everybody need much water, and someone have clothes but not everybody need much clothes. I need clothes and found someone who has that also needs food. I have to negotiate how much food to give and how much clothes that person will give. Very impracticle and people began to demand a single unit that can measure the value of every item or an item called money that can buy anything.
People began experimenting with salt, sugar, crops, shells, and other commodities as currencies but only one type was admitted through out history and that is precious metals. Mainly gold and silver have the property of immutibility which means no one today can create gold, you have to mine gold. This means today that gold is scarce which is known to have limited supply. The property of gold also cannot deteriorate which the form of gold you have now will remain the same almost forever which indicates a good commodity to store. Gold is divisible where items can be valued in weight of gold for example a meal is worth a few miligrams (mg)s of gold. People began to create gold coins that makes trading much more practical then before.
In my opinion, for average people, gold was doing well as a currency but gold was not practical enough to be used on nation scale for example it is very heavy to carry for massive transaction not forgetting to mention costly as well and risk of being raided or anything that can lose the physical golds. Dividing gold is still not easy for regular people where you need smithing which means that there is a limit to the divisibility. Say that I carry a few mg of gold but I only want to buy one candy, usually I cannot but have to purchase many candies or other items.
This is where paper money comes in. Instead of carrying heavy gold, we trust banks to store our gold and receive a certificate or a kupon where each of them represents an amount of gold. That is the good dollar I knew, where each dollar can be exchanged to fixed certain amount of gold. Paper money are easier to carry and easily divisible and vice versa. It is also practical enough to be used as a medium of exchange on a nation scale. Then comes banking, the digital age, and online transactions and you know the rest.
This book does not emphasize cryptocurrency as a solution to financial value. You can find gold bugs in agreement with Bitcoin activists regarding the problem with the current financial system but does not agree with Bitcoin especially other cryptocurrencies mainly because they do not have physical form and many other reasons. Like this book stated previously that if the problem is only financial value, there are other solutions which proof historically effective. Eventhough these years Bitcoin and some cryptocurrencies have the best performance, regular people cannot handle the short term volatility. However, before the purpose of tackling financial value, Bitcoin and other cryptocurrencies are created for a larger purpose.
The last thing that they will try to do is to force control the price of the market to their fiat currency. This happened a few years later in the United States after President Nixon no longer supports the convertibility of the Dollar to gold. The worst was near the end of Roman Empire where they released a law that citizens are forced to work and continue family business but at a controlled price punishable with Death.
With Bitcoin and other cryptocurrency, regulatorily can be banned but technically cannot be stopped or censored, technically cannot be confiscated where the only way is to persuade, pressure, or social engineer the owners to hand over themselves, both the supply function and distribution are algorithmicly and mathematically defined which ideally is neutral and not controlled by any single entity, and also most are open and transparent.