Thread by @ssaig

What is crypto in simple terms?
Thread 🧵

To understand this, we need to completely understand what regular currencies are.

Before money existed, people used to exchange goods (barter system). For example if Ram knew how to make milk and Abdul knew how to make ice cream, they would get into an agreement to share

But this got complicated as too many parties needed to be involved to many separate services for one outcome or product.

So money is literally an “economic buffer” if you think about it. Money allows people to convert and store their efforts into something that maintains value

So if Ram has one bottle of milk and Abdul doesn’t require it, Ram can issue a peace of paper that says “this paper = 1 bottle of milk”. Now that paper has a value associated with it.

But then arises a bigger issue. What if Ram takes 5 hours to make milk? How does one calculate that? What if it’s 10 hours? This is where counterfeiting comes into action. Anyone can fake their time & effort. That’s the reason 💰 has always been associated with something finite

Money is mostly associated with Gold because of this. Gold is rare and only naturally occurring in large quantities. So if someone has gold, it can mean only 2 things:

# He/she/they/them got it from nature
# Got it from someone else who got it from nature.

And the best thing about gold? It’s highly measurable. Weight. Yes. So when Ram makes milk, Abdul now has the ability to value that milk based on the quantity of gold. So now when he has gold, he can always trade with someone who values gold.

But there is another issue with Gold. It’s very easy to lose gold and in large quantities, it’s a heavy element. For this reason countries began to centralize their gold reserve and issue notes based on the value.

Gold dependency now now over. For example in most countries, currency is no longer measured in gold but currency itself is a resource now. The government “mines” currency. They can create a scarcity as well as protect people from counterfeiting. This trust in govt gives its value

So if you’re paid AED 20/ hour it means an hour of your time in a format that’s is hard to duplicate. If you destroy that AED 20, it creates an instability in the system because you creates a value and then destroyed it.

Similarly, if you find AED 20 on the pavement, that money represents someone else’s time and effort and you just gained it without an effort.

Okay now you might have a clear idea how things work. Now back to #cryptocurrecy

Crypto’s are digital forms of currency. Okay remember this well. The word digital.

In the digital world it’s super easy to duplicate anything. A piece of code, a wallpaper, a folder. Almost anything can be a counterfeit.

This simplicity in creating copies made creating a online digital currency super hard and almost impossible. It’s not that it got suddenly popular because no one had the idea before. The more popular something is, the more easier to fake it than earn it.

Blockchain changed that forever. This means now there is a way to keep your efforts as digital tokens that can’t be duplicated. They are the new digital equivalent of gold.

And it’s also finite. There is a limited amount of tokens a coin can hold. For example the bitcoin token limit is 21 million coins. But blockchain is much more than that. The fundamental question “where did they get that” is also answered through a public ledger of transactions.

So if you have some bitcoin with you, that means:

# you have mined it yourself
# you bought it from someone who mined

And because it’s public and decentralized, no single group / people is allowed to “print/make more of it”.

Now you know why India banned crypto🤗.

This whole “Reliability” and “dependability” is why some currencies hold more value than the other.

Glad you made it this far.

The difference between say bitcoin and DOGE comes down to minute changes in how they operate. At it’s core they are same.

This thread also teaches how Ram and Abdul are friends and they would never use religion to discriminate.

Be Ram
Be Abdul.