The concept of cryptocurrency can’t be explained without diving into the origins of money. At first, when money as we know it didn’t exist, people used to exchange one good for another—this was called barter trade. The cons could be easily seen, which is why coinage was introduced. When transacting, you either received or gave coins in exchange for a good or service. Carrying all the money wasn’t safe and convenient at all—this is when paper money enters the circulation. Originally, gold coins were held in a bank, and a customer could deposit or withdraw them with paper money as proof of ownership. It worked for a while, but when governments needed money to fund wars, they opted to print more paper money instead of increasing taxes, thereby diluting its value. In 1971, we officially entered the era of fiat money that incentivized you to spend. If you tried to save over a long period of time, you were screwed because of inflation. In 2008 everything changed when Satoshi released the Bitcoin whitepaper.

A cryptocurrency is a digital currency that uses cryptography and blockchain technology to facilitate and verify transactions. The purpose of a cryptocurrency is very simple—just like any traditional currency, it aims to serve as a medium of exchange while fixing all the predecessors’ flaws.