Cryptocurrency for Dummies by a Dummy

I am far from an expert on cryptocurrency. Some of you undoubtedly know more about it than I do, and you can correct me in the comments where I got something wrong or if I missed something. If I've got it all wrong, I'm sorry. I probably should have read up on it before writing this, but I didn't/

Off the top of my head, here's how I think it works, at least with regard to Bitcoin:

All crypto transactions are recorded on the blockchain; a large mass of computer code going back to the first transaction and kept in such a way that any fudging of the code would leave obvious traces that would be noticed by those who keep track of it. Since it is spread among millions of computers, any messing with the blockchain would show up as a singular discrepancy and the other computers would recognize it as fake.

The blockchain gets continually updated by computers doing crypto "mining", which is just logging the transactions and verifying them by seeing if other computers agree to the details. 

After a set amount of computer work doing this, the computer's owner is rewarded with a specific amount of crypto. Since there is a set limit to the amount of Bitcoin that can ever be created, every so often (I think it has generally been every four years or so) the amount of Bitcoin paid for that amount of work gets halved. This way there's still Bitcoin to mine. Since the price of Bitcoin keeps rising, this doesn't mean mining it "pays" less in value than it used to. You may get less Bitcoin for a reward in 2024 than you would have in 2012, but the dollar value of Bitcoin is so much higher that it's still worth it. (I don't mine Bitcoin, because it takes a dedicated computer set up for that.)

Since all the blockchain is held simultaneously on all the computers doing the mining, you could wipe out 99% or more of those computers and the blockchain would still exist. As long as at least one computer still contained the blockchain, the data could be shared with more computers and it would be widely distributed again. 

There is no "head" for government to target or control. 

Because all transactions are recorded, and stay recorded, as part of the blockchain forever, I don't think it's as anonymous as many would like to believe it is. Especially since most of the ways to spend it leave a trail. As with all things, protect yourself in all that you do.

Is it real money, and is it worth using?

Fiat money exists and has value because government promises to keep stealing from the population into eternity to keep the money worth something... something you can pay its extortion with. Governments can print/create fiat money without limit, inflating away its value (as we've been watching happen). As long as people keep accepting it in trade, I'll keep using it in spite of the negatives of being attached to the state. Using fiat money isn't capitulation that government is necessary or good any more than driving on government roads means you believe without the state, no one could build roads.

Gold and silver have value because they are pretty and useful and durable, and people have always been willing to accept them in trade. There doesn't have to be an objective reason. They can't be readily created from cheaper materials so the supply is set (unless a gold asteroid falls to Earth or the cost of creating gold in a particle accelerator drops enough that the cost of making gold is less than the price of gold). I admit I have a visceral reaction to gold and silver coins that I don't have to other forms of money. I enjoy the feeling of them in my hand and in my vision.

Cryptocurrency exists as computer code, complete and whole inside each of the untold millions of computers keeping track of it. Bitcoin has a set upper limit to the amount that can ever be created- and lots of it has already been irretrievably lost over the years (mainly when it wasn't worth enough to keep up with). All of this makes it non-inflationary.

All money is subjective. You aren't required to accept or use any of it, with the exception of fiat money being imposed by force by The Ancestral Enemy. All money has pros and cons. One pro for crypto is how badly governments hate it and what it represents.

I personally like crypto. I have used it to buy gold, silver, guns, and gun accessories. I bought someone else a television as a gift. I have used it to pay expenses, which isn't as much fun. As long as crypto works as money, I'll keep using it. I trust it for what it is, and I don't think I have unrealistic expectations about it or its supposed anonymity.

You do you.

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Thank you for reading.  

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