The Rise of Altcoins: Beyond Bitcoin's Beginnings
- Bitcoin was the first cryptocurrency ever introduced. However, many other cryptocurrencies were later developed, collectively referred to as altcoins.
- Litecoin, the first altcoin inspired by Bitcoin, operates without a central authority like Bitcoin but does not include a payment system.
- Dash, another notable altcoin, was launched in 2014 and gained significant attention for its high level of privacy in transactions.
- Ethereum, introduced in 2015 and developed by Vitalik Buterin, shares similarities with Bitcoin and is often considered a strong competitor.
- Ripple, widely used today for its speed and minimal transfer fees, is another advantageous altcoin adopted by many platforms.
Why are there so many cryptocurrencies?
The abundance of cryptocurrency types arises from the unique features and speeds at which each operates, with altcoins often distinguished by their specific qualities. Cryptocurrencies derive their name from the diverse encryption techniques used to secure them. Although they initially failed to gain significant value upon release, these decentralized digital assets have since captured the interest of many investors.
Unlike traditional currencies, the value of cryptocurrencies is not tied to a country's economy since they are not linked to any specific location. So, how is their value determined? The answer is quite simple! Like many other aspects of life, the value of cryptocurrencies is driven by the supply-demand relationship. In essence, as demand for a cryptocurrency increases, its value rises; conversely, as demand decreases, so does its value.
Things to know about cryptocurrency
While cryptocurrency first emerged in 2009 with the manifesto of a pseudonymous figure known as Satoshi Nakamoto, the foundations of this concept date back to 1983.
Cryptocurrencies differ significantly from centralized currencies, offering both advantages and disadvantages. The most notable distinction lies in their governing principles: centralized currencies are influenced by inflation policies and central authorities, while cryptocurrencies are driven solely by supply and demand. Additionally, cryptocurrencies enable swift transfer transactions.
However, a major drawback of cryptocurrencies is the inability to reverse incorrect transfers due to the absence of a central authority. In centralized systems, governments can print unlimited money, increasing inflation as needed. In contrast, cryptocurrency production is capped at 21 million, making this limitation a particularly striking aspect of the system.
About cryptocurrency production
Cryptocurrency production is carried out by "miners," a process that is highly resource-intensive. It requires powerful systems and incurs significant energy and labor costs, making mining seem impractical for many. To simplify access to the crypto market, digital exchanges allow individuals to convert their local currency into cryptocurrency for a reasonable commission.
Today, the crypto market includes over two thousand types of virtual currencies.
When cryptocurrency first emerged, Satoshi Nakamoto produced as much as he wanted. However, since no one else was using the technology at the time, this cryptocurrency held no value. The turning point came with the support of Hal Finney, a pioneer in the field, leading to the first-ever Bitcoin transfer between Nakamoto and Finney.
First purchase with cryptocurrency
Following the first money transfer between Satoshi Nakamoto and Hal Finney, cryptocurrencies began to be produced, yet their practical use remained unclear. Although crypto money was being created, the lack of awareness about the cryptocurrency market left it without a purpose.
In 2010, a pivotal moment occurred when a user posted an ad on a forum, offering to buy pizza in exchange for Bitcoin. For the first time, a transaction took place: two pizzas worth $25 were purchased for 10,000 Bitcoins. This event marked a turning point, boosting cryptocurrency's reputation as it achieved its intended purpose. As a result, many investors started entering the market.
Another concern for users was privacy. Cryptocurrency accounts required no personal information, such as names or surnames. Instead, digital wallets were accessed using a unique identifier, similar to an IBAN, and a user-generated password. These wallets did not legally establish ownership rights, nor could anyone in a decentralized system be held accountable. However, this lack of accountability had already been addressed through specific protocols.
The responsibility for digital wallets and the transactions conducted through them rested entirely with the user. While the system would not approve transfers to invalid accounts, it could not reverse funds accidentally sent to a valid account within the system.
As a result, users needed to exercise caution with their transactions to avoid irreversible errors.
To address this issue, the system recommended creating multiple wallets. Although personal information was not visible, transaction history—both incoming and outgoing—was public. As a result, holding large amounts of cryptocurrency could attract the attention of scammers, making users vulnerable to fraud. Therefore, it was advised not to open numerous wallet accounts or conduct repeated transactions from the same wallet to reduce the risk of attracting unwanted attention.
Cryptocurrency overview
Once the privacy issue was addressed through the above processes, attention shifted to the question: "Where will cryptocurrency be used?" Initially, the project was unknown, but as demand grew and its value and profitability increased, more people became interested in cryptocurrencies.
Notable investors and online game creators entered the crypto market and became active participants. Many global companies began accepting cryptocurrencies for payments, marking the point at which crypto money integrated into the shopping world.
Opinions on cryptocurrency
There were differing opinions about cryptocurrency, with experts divided into two main groups:
The first group argued that the privacy and anonymity provided by cryptocurrencies made them ideal for illegal activities, supporting the view that they should be banned.
On the other hand, the second group opposed this stance, claiming that cryptocurrency was a valuable investment tool, with its value fluctuating based on the supply-demand balance and its transfer speed being a key advantage.
Despite these debates, most countries, particularly in the Middle East, did not implement any legal regulations regarding cryptocurrencies. As a result, cryptocurrencies were neither banned nor taxed in most places.
Today, many major companies accept cryptocurrency payments. The use of cryptocurrencies, which can be converted into any desired currency at any time, continues to grow and expand globally.
