Although many people in our society seem to be confused by the emergence of cryptocurrency as a legal tender, it’s important for people to realize that currency in general has gone through many forms throughout history. In fact, experts believe that metal items were being traded as currency over seven thousand years ago. It was King Alyattes of Lydia who is credited with founding the first viable currency in 600 B.C. He created the first coins using gold and silver and marked them with an imprint identifying the issuer. He also standardised the weight of coins. Almost all coins used today are descendents of his coins.
In cryptoeconomics, people strive to address some of the major problems that have plagued regular currency for years. One of those issues is the trust needed between two parties. With crypto, this need is theoretically eliminated due to the existence of the blockchain. Within the blockchain, every transaction is secure and there are series of records to detail every transaction. Rather than existing on one database that can be hacked or corrupted, records are held across a system of computers that are not connected to one another. This way, it is impossible for someone to hack into and/or destroy an entire group of computers. Proof of work also ensures that the correct node (computer) is receiving the credit for solving the difficult math problems needed to verify each transaction.
Combining the science of cryptography with economics, bitcoin and other altcoins can now go where no currency has gone before. In this decentralized system, the process of mining is what creates new coins. Unlike silver or gold, people do not need to carry change around or put things in a safe deposit box. The money simply exists on a hard drive. People can then take their balance to an exchange and trade it in for fiat currency, which is currency that has been created by a government or group of governments. People can also trade crypto for goods or services, meaning that there is no reason why it cannot replace fiat currency entirely at some point in the near future. It also means that the concert of bartering has come full circle. Although bitcoin has stirred up more than a bit of controversy in its days, big-time investors remain very bullish on its prospects. Designed to solve a problem that humanity has faced since the conception of currency, it seems destined to succeed.