Digital currencies are seen as a revolution that redefined the meaning of money in our time, as it is a kind of electronic money, but it does not exist in a material form like the money that we use in our daily life.
Instead of you have banknotes or metal pieces in your wallet, digital currencies are completely stored digitally on the Internet, and these currencies use modern technologies to exchange money online, which are completely different from the traditional money printed by central banks.
The most famous of these currencies are bitcoin, and a variety of other currencies such as ethereum cannot be overlooked, as all digital currencies seek to change the rules of the global financial game.
However, where is the importance of digital currencies? Simply put, digital currencies replace the traditional financial system that depends on central banks. In digital currencies we do not need any third party such as banks or financial institutions to pass money between us, and we can transfer money directly to another person around the world, and this is done online in a fast and low -cost way.
How do we understand digital currencies?
A new technology wave .. Digital currencies enter the financial world
With the development of technology at the end of the 20th century, we have seen many technological waves that changed how we interacted with the world, let’s review these waves that changed how we dealt with money and economy.
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https://www.youtube.com/watch?v=s_qql13oak
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First wave: Internet (1982)
The first wave began with the discovery of the Internet, which radically changed the way to communicate between individuals, as it made it possible to communicate between people around the world easily, and e -mail, forums and websites have become basic tools for interaction, and this technological age paved the way for many innovations that came after him.
- The second wave: direct interaction (after 2000)
After the appearance of the Internet it became possible to interact directly and immediately on the Internet, and social networks that radically changed how individuals communicate with each other.
- The third wave: e -commerce and the Internet of Things (after 2010)
With the development of the Internet, we began to witness a boom in the field of e -commerce that made it easy to buy goods and services via the Internet, as the Internet of Things (iOT) appeared, as smart devices such as phones, cars and homes began to interact with each other online.
This wave represented another shift in the world of trade and economics, as technologies have become more interconnected and widespread, and it became possible to deal with money and business in all its forms through electronic applications.
As these technological waves advanced, digital currencies began to appear to constitute a new shift in the world of money and economics.
In 2008, after the global financial crisis, a research paper was published on the Internet by a person under the name “Satoshi Nakamoto” bearing a message that there would be financial, social and political freedom, and it was written in this paper “Bitcoin- Electronic Cash- from one side to the one without a mediator”, and Satoshi was aimed at financial liberation from the control of the central banks, their restrictions, monitoring and abandonment of the traditional mediator in his mission.
“The politicians save banks again,” Nakamoto wrote, noting that governments intervene to save banks in economic crises, which exacerbates financial corruption, as the price is usually driven by ordinary individuals.
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This bitcoin was offered as the first cryptocurrency, and was dealt with in January 2009, which depends on blockchain technology, and this technology helped to store financial transactions quickly without the need for a mediator such as banks and centralization of money.
The goal of these currencies according to the innovative idea is to get rid of the mediator, which is a sergeant at the same time and can impose its changing conditions according to its policy and also get rid of the burden of cost and not to submit to its economic and political policy that negatively affects currency prices.
What is blockchain?
Bluechen is a type of electronic notebook in which all transactions are recorded in a safe and transparent manner, so that it cannot be manipulated.
Imagine that there is a notebook everywhere, and every time there is an exchange of money between two people (such as sending or receiving Bitcoin), and this exchange is written on his page inside this notebook.
https://www.youtube.com/watch?v=ml1yjlwlqvg
The beautiful in blockchain is that it is not saved in one place, but rather is copied across hundreds or thousands of computers around the world, which means that it is impossible to manipulate it.
Bluechen is a solution to mathematical equations, and based on a person’s solution to these equations, you are rewarded because you have resolved and given bitcoin.
How to make a blockchain
- Transactions: every process (such as sending or receiving Bitcoin) is recorded in a “block” like a new page in the notebook.
- Verification: Before the mass is added to the large book (blockchain), it should be validated, and this is done by solving complex mathematical equations.
- Registration: After verification, add the block to the chain, and therefore it cannot be changed.
What is the meaning of the word “mass”?
The “mass” is simply a set of transactions (such as money transfers) that were collected together, and whenever new transactions are collected in a block (such as a page) and added to the series after verification.
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The simple model to clarify the idea
- Imagine that you are in a school and you need to register students ’grades in the“ book ”of each student.
- Each time a new degree is added in a new “page” of the notebook.
- The teacher cannot change or scan any degree as soon as it is registered in this notebook, because he is distributed to many people in school, and everyone has a copy of it.
Blocine work characteristics
- Decentralization
In the traditional system, when sending money to another person, the process must pass through the bank or the financial institution that verifies its health and registered it in its private account book.
But in the blockchain, there is no third party like the bank, and transactions are valid through the people who participate in the system, who make sure that the transaction is correct, each device that participates in the system works to ensure this.
- Encryption and data protection
In the blockchain, the data is protected using advanced encryption techniques, and this means that it is difficult for anyone to change or penetrate the transactions after adding them, as the information is encrypted.
https://www.youtube.com/watch?v=hxr8Iifwsqm
- Add transactions
When making a transaction such as sending a digital currency from one person to another, a new block is added to the blockchain chain, and this mass contains the details of the treatment – such as the sender, the recipient and the amount – after adding it, and the transaction becomes permanent and cannot be changed.
- Transparency and privacy
Everyone can see the transactions that occur in the system, while the transactions appear, the details of the identities of the people participating in the transactions remain hidden.
Examples to clarify blockchain
- Example: Google Drive
Imagine that you have an important file on “Google Drive”, this file can be common between you and many people.
Every person can view the file, add to it and adjust it, but no person can adjust the file unless he has permission, and if anyone has a change in the file, the changes are accurately recorded, and they cannot be manipulated or modified later.
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After reviewing the part of the philosophy of digital currencies and blockchain and clarifying it, we will look at the next part to clarify different points that are circulated by the simple individual for this new financial system, its advantages, disadvantages and effects.
Who controls Bitcoin circulating around the world?
Bitcoin was touched because it is the most popular currency globally, and it depends on the decentralized system in financial transactions, in addition to overcoming its market value more than 1.7 trillion dollars, so it was necessary to highlight the most important owners of this currency from countries, institutions and investors.
Political exploitation of encrypted currencies
- Trump’s influence on encrypted currencies … from political appointments to “Trump Quinn” failure
One of the main points that arouse controversy in the cryptocurrency industry is political interventions. After the arrival of US President Donald Trump – who received great support during his election campaign from the “encrypted currency lobby” – there was a focus by the current American administration on encrypted currencies, compared to the severe control of the industry during the mandate of former President Joe Biden.
https://www.youtube.com/watch?v=Dnzn26693e
- Appointment of an ally for the coded currency industry
When Trump took office, he started changing the policy towards encrypted currencies, and had a direct impact on the encrypted currency industry by appointing Paul Atkins, a lawyer who is a strong ally of this sector, to head the US Securities and Exchange Commission (SEC).
This appointment led to a reduction in the regulatory pressures on companies working in the field of encrypted currencies, which allowed them to expand without strict adherence to the regulatory laws that the legislators were supported in the Biden administration.
- Trump Quinn .. heavy collapse and losses for investors
Political intervention was not limited to appointments only, Trump personally launched his own encrypted currency under the name “World Financial Liberty”, which gave him a personal share in the success of this sector.
This transition to the support of encrypted currencies is not just political support, but also a motivation for his own interests, as there was a personally added value in the continuation of this sector.
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The thing that made a major blow to the cryptocurrency investors is the failure of “Trump Quinn”. After Trump began his promotional campaign for his cryptocurrency, its value increased temporarily, which attracted many ordinary investors.
Over time, this currency was subjected to a sharp decrease in its value, causing a huge loss to investors who were betting on the success of the project.
Trump had defended this cryptocurrency on his media platforms, but when its value collapsed, this was a shock to investors, as more than 800,000 accounts were exposed to losses of more than $ 100 million because of their investment in that currency.
To the follow -up, the presence of characters such as David Sachs, “Caesar AI and Cross Currency” indicates that Trump was seeking to benefit from cryptocurrency technology and technological innovation in promoting the American economy.
The nomination of personalities is directly related to cryptocurrencies – such as Howard Lottenic – reflects a desire to push this industry towards more official recognition and participate in national policy.
However, it remains difficult to determine the extent of Trump’s full commitment to encrypted currencies, especially since his positions in the past on economic issues are volatile and prevailing in personal vision.
The negative impact of politicians on the market .. Argentine president as a model
Besides Trump, there was also Argentine President Javier Millie, who caused a sensation in the world of encrypted currencies. In a surprise step, Millie launched a new mechanical currency that was promoting it in Argentina, a cryptocurrency that does not have a real practical function, but rather depends mainly on the joke or a famous amulet.
These currencies, which were launched for marketing or symbolic purposes, are known for their high risks, but Millie attracted many Argentine investors, which led them to bets on them.
https://www.youtube.com/watch?v=exsgk6fqjh0
However, as with the cryptocurrencies that were launched under the patronage of the politicians, the Milli currency witnessed a sharp decline in its value in a very short time, and the prices suddenly collapsed, which led to heavy losses to Argentine investors who decided to engage in this risky investment.
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This sudden decline in the value of the currency raised a political crisis within the country, as investors incurred financial losses exceeding 250 million dollars.
Other politicians and their impact on the encrypted currency market
Other politicians’ interventions were not only limited to Trump and Milli. For example, Russian President Vladimir Putin had a role in influencing the encrypted currency market through his economic policies, especially with the statements made about Russia adopting Bluechen technologies and searching for alternative markets for economic exchanges away from Western domination, and this statement had an impact on directing investments towards encrypted markets in other countries.
Also in China, government policies played a role in market fluctuations. Although China has banned cryptocurrency mining in 2021, government statements about digital currencies contributed to creating a kind of fog.
In the end, it is clear that digital currencies are no longer merely financial innovation, but rather has become an arena in which technology overlaps with politics and economics, and from bitcoin to cryptocurrencies related to politicians directly affected political decisions on the course of these digital assets, between official support, restricted legislation and the manipulation of the market.
And with the continued development of cryptocurrencies, the most important question remains: Will it remain a tool for financial liberation? Or will it turn into a tool in the hands of political and economic forces?
