What a crazy year for Bitcoin and crypto coins like Ethereum (ETH), Solano (SOL), and other altcoins, that have made, and lost, tons of value, over, and over, all year long. Many people have invested in Bitcoin with the belief that it will become widely adopted as a mainstream currency that is used everywhere to buy and sell goods and services. But will that come to fruition? Will the world at large accept digital cryptocurrencies as the “gold standard” for storage of value?
If 2021 was any kind of marker for the future of crypto currencies, the future looks bright indeed.
What is Bitcoin?
Simply put, Bitcoin is the digitalization of money, via decentralized blockchain technology. Don’t worry it is much simpler than it sounds. Bitcoins are technology that can process payments, adopt future technologies by autonomous learning capabilities, that evolve with time and experience. Bitcoin is operated in a decentralized landscape because there is no one entity who owns the Bitcoin blockchain.
On the contrary, Bitcoin records every transaction on a public ledger, anyone with Bitcoin can view and access. This ledger is hack proof because the Bitcoin Blockchain automatically records transactions on thousands of networked computers, simultaneously.
The reason Bitcoin has exploded in value is because the storage of money through Bitcoin is inflation proof, no one can add more than 21 million Bitcoins, so it is a finite asset. Plus, no bank, government, or IRS can access your private funds, provided that your Bitcoins are stored within an offline wallet, like Trezor, Ledger, or Keep Safe cold storage wallets.
Bitcoins are mined through a process called “proof of work” which awards additional Bitcoins when new blockchains are created when intense mathematical equations are solved by super computers, called miners. This process uses huge amounts of electricity to power the miner’s computer networks and is the one drawback identified in 14 years of Bitcoin’s existence. Remember, 21 million is the cap. After all the Bitcoins get mined there will never be anymore produced by the blockchain miners.
What is Ethereum & Altcoins?
Ethereum is blockchain technology, just like Bitcoin, except it operates a bit differently. Ethereum runs the entire De-Fi universe of smart contracts and altcoin blockchain services and products. Ethereum operates through a “proof of stake” process, where those who own Ethereum, can benefit, when new ETH is awarded, or mined. However, this process doesn’t require the super computers to solve mathematical equations and uses far less power.
Plus, Bitcoin blockchain does not host any De-Fi applications and Ethereum’s blockchain has exploded with new chains, and new De-Fi applications, which can do just about anything, via smart contracts.
What are Smart Contracts?
Smart contracts are blockchain applications, that can automatically process predetermined things which are programmed into the chain and cannot be changed or altered. Much like a coke machine can process the sale of a soda from start to finish, producing change when required, or showing you the soda, you want is sold out, and returning the money. This is a simplified version of what blockchain tech truly is. You can create a blockchain to handle payments owed to creditors, like credit cards. You can power corporate platforms that directly interact with their clients’ accounts and can handle many of the functions that employees are paid to handle now.
Big names like Visa now offer Bitcoin rewards credit cards, and you can even invest in Bitcoin IRA’s through well known brokerages on Wall Street.
Solano (SOL) blockchain is creating a messaging platform, where anyone can get a phone number attached to the Solana blockchain that can receive messages that get prepaid by the users. In other words, any high-profile celebrity, singer, actor, could purchase this tech and get paid each time they get a text message from their fans.
Or your barber can get this platform and chare $20 for a haircut. You could get his number and each time you send him a message after your haircut, it would cost you $20, and he would receive the money in seconds.
Blockchain and smart contracts simplify the financial world and bring the cost of doing business drastically down from where it current, is for most industries.
This new era of decentralized finance has taken hold in a big way. Bitcoins total market cap hovers around 1 trillion, which is only a fraction of the total amount of financial business handled by centralized companies such as visa. But even these companies are begging to adopt Bitcoin as the essential way to interact with their clients through De-Fi, and the most proficient way to store value and wealth that has ever been developed in human history.
2022 looks to be another volatile year for crypto coins in general. But the consistent upward trend of value will continue as more of the world accepts it to be the gold standard of money, value, and storage of your hard-earned money moving forward.