What is Cryptocurrency?
Cryptocurrency was once treated as a scam by many, and there are still people who doubt its practicality. However, as astronomical amounts of money poured in, those who recognized its value made huge profits, and it became something that no one could ignore anymore.
Many altcoins attempted to list in Korea by mobilizing internet celebrities, but most failed due to public rejection and skepticism about their effectiveness. The skepticism was mainly directed at altcoins rather than major coins like Bitcoin and Ethereum.
The Nature of Money and the Birth of Cryptocurrency
Money has no substance. If all depositors tried to withdraw their money from banks, banks wouldn't be able to provide all that money. This isn't just a matter of contracts with other businesses, but rather a question of whether the amount of capital has been artificially inflated.
In this context, the transition to cryptocurrency might not be about plugging leaks in the existing monetary system, but rather abandoning it to solve the problem. And if that's true, shouldn't we buy in before this value rises further?
When money flows in, what had no substance gains substance... it's an inevitable flow of change.
Major Coins vs. Altcoins
| Feature | Major Coins | Altcoins |
|---|---|---|
| Market Cap | Very High | Relatively Low |
| Recognition | High | Low |
| Volatility | Relatively Low | Very High |
| Use Cases | Diverse | Limited |
| Trust Level | High | Low |
Major coins like Bitcoin and Ethereum have established themselves as digital assets with clear value propositions, while altcoins are still in the experimental stage with high uncertainty.
How Cryptocurrency Works
Cryptocurrency operates on blockchain technology, which is essentially a distributed ledger that records all transactions across a network of computers. This technology ensures:
- Decentralization: No single entity controls the network
- Transparency: All transactions are publicly recorded
- Immutability: Once recorded, transactions cannot be altered
- Security: Cryptographic methods protect the network
Current Applications and Future Prospects
Cryptocurrency is already being used in various fields:
- Digital Payments: Fast, low-cost international transfers
- Smart Contracts: Automated contract execution
- DeFi (Decentralized Finance): Financial services without intermediaries
- NFTs: Digital ownership and art
- Supply Chain: Transparent tracking of goods
Challenges and Limitations
Despite its potential, cryptocurrency faces several challenges:
- High Volatility: Prices can fluctuate dramatically
- Regulatory Uncertainty: Governments are still figuring out how to regulate it
- Energy Consumption: Mining requires significant electricity
- Scalability Issues: Current networks have limited transaction capacity
- User Error: Wallet security depends on user responsibility
The Relationship with Government
Governments are trying to tax cryptocurrency transactions, and blockchain transparency could actually benefit them. There's a tension between government control and the decentralized nature of cryptocurrency.
The question is whether governments will embrace this technology or try to suppress it. The transparency of blockchain could make tax collection more efficient, but it also challenges traditional monetary control.
Social Perception and Trust Issues
The name "cryptocurrency" itself sounds somewhat arrogant, and the concept seems ambiguous until everything becomes "NFT-ized." The current market is dominated by hard-to-value art pieces, and for the market to gain more interest, "safe assets" need to enter.
There's an irony in its existence separate from physical assets - the idea is good, but there's a disconnect between the concept and reality.
Current Market Reality
In the early market, some people accumulated wealth, but currently, even on OpenSea, active trading is largely an illusion. There's much suspected wash trading that makes the market appear more active than it actually is.
The royalty fees paid to original creators act as a barrier to transactions. Many people, including myself, are reluctant to buy NFTs with high royalties.
While new NFTs can be created, it's hard to gain attention, and the market is dominated by "meaningless pop art."
Technical Aspects
Blockchain Types: There are various types including public, private, and consortium blockchains.
Smart Contracts: These are self-executing contracts with terms directly written into code, enabling automated transactions and complex applications.
Metadata: This includes information about the asset, ownership history, and other relevant data stored on the blockchain.
Gas Fees: These are transaction fees on blockchain networks. They're much lower now and vary greatly by time, typically ranging from $10-100.
Conclusion
Cryptocurrency has evolved from being seen as a scam to becoming an undeniable reality. While there are still challenges and uncertainties, the technology has proven its value and is being adopted in various industries.
The key is to understand both the potential and the limitations, and to approach it with a balanced perspective. Whether you're an investor, developer, or simply curious about the technology, cryptocurrency is worth understanding as it continues to shape our digital future.
The future of cryptocurrency is still being written, and its impact on society will depend on how we choose to adopt and regulate this revolutionary technology.