Taking the mystery out of cryptocurrencies

How much do you know about bitcoin and other cryptocurrencies? Even if you do not deal with them yourself, which is most likely the case for now, you need to have minimal information about cryptocurrencies, for the subject is the hottest today in the realm of technology, finance and global networking. The truth is that few people really understand completely how it works. Except, perhaps, for the fact that one bitcoin is today worth around $11,000!

The mystery starts with the prefix “crypt” itself. It is a Latinised form of the Greek adjective “kryptos” which means “secret, hidden or concealed”. That much for a start – not very reassuring.

In practice, however, a cryptocurrency is but a virtual currency that is “encrypted” (or encoded) to secure it and to validate it when a transaction involving it takes place on the Internet. The encryption therefore is for safety and is not intended to frighten anyone. You may as well refer to cryptocurrencies as digital currencies, simply.

Though first introduced in 2009, it started making real waves over the last couple of years. The phenomenon has been particularly amplified since last November with the public reading everywhere on the web that one single bitcoin was worth $20,000 at its peak, that it suddenly lost half of its value around December, and that many people had paid around only $200 for one bitcoin when they first bought it a few years ago. This was more than enough to attract the world’s attention.

There is a lot to be said about bitcoin and a complete description or explanation is beyond the scope of this article. At present there are more questions than answers. At the time of this writing, Jordan, through its central bank, just warns against using bitcoin, saying it is “no legal tender”, but dealing with bitcoin in the country is not a crime. Countless other countries, including the USA, Australia and Canada to name only these three, are either accepting it formally or are being just “bitcoin-friendly”.

To quote the most celebrated man in the world of IT, Bill Gates himself, back in 2014: “Bitcoin is better than currency.”

Confirming the trend and the thirst of the public for better knowing and understanding cryptocurrencies, a very interesting conference was held earlier this week in Amman with a presentation by renowned Jordanian economist and former Minister of economic affairs Yusuf Mansour. It was organised by the Friedrich Naumann Foundation for Freedom in the country, in cooperation with the Young Entrepreneurs Association. Mansour spoke at length about the subject, shedding some invaluable light on cryptocurrencies, for the pleasure of a fascinated audience.

In short, he said that in the end a valid currency is the one that the people accept as such: “money is what people agree it is”. History abounds with examples of currencies of all kinds, from salt to stone, gold, silver, etc. He added saying that “it is impossible to predict the future of technology and of cryptocurrencies”, given the speed of change and the absolutely incredible achievements, the radical transformations, we have seen so far, essentially in global networking and telecommunications.

Alongside cryptocurrencies runs the blockchain concept, the “virtual highway” on which bitcoin rides. It is “a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.” A large part of Mansour’s presentation was dedicated to the blockchain concept.

It is worth noting that whereas bitcoin is the most widely known and traded, there is currently more than 1,000 other cryptocurrencies circulating on the web and in the world. They are typically referred to as altcoins, or alternative coins.

It is impossible not to acknowledge the global concern of governments and financial institutions about the increasing value, usage and acceptance of cryptocurrencies.