By While everyone is able to name a few well-known crypto-currencies, fewer are those who are familiar with the crypto ecosystem and its concrete differences with so-called “fiat” currencies (the euro or the dollar, for example).
Traditional money benefits from extensive logistics aimed at making it “credible” in the eyes of users, in particular through the support of commercial and central banks. This is not the case with crypto, which is nevertheless rapidly becoming more democratic and is increasingly accepted as a means of everyday payment.
What is cryptocurrency?
In contrast to “classic” currencies, cryptocurrency can be defined as a digital currency that is exchanged peer-to-peer, i.e. in a decentralized way, without an intermediary, thanks to an encrypted procedure on a blockchain.
Operations carried out in crypto-currencies are stored on blockchain, which is neither more nor less than a digital database. The blockchain is a technology that makes it possible to carry out transactions (such as payments) and to transmit information such as contracts or sales, in a secure way and without an intermediary. This information is stored in chronological order in blocks. When an operation is saved, the previous one becomes unalterable, and so on. Thus, all the operations recorded on the blockchain, as they are passed, are kept, consultable by all the participants of the network and tamper-proof.
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Virtual currency
Virtual currency, crypto-currency, electronic money, crypto-asset… There is no shortage of terms to talk about crypto-currencies. They are often referred to as digital currencies in the sense that they have no physical support. Here, neither banknotes nor coins: everyone holds their assets in wallets of which they alone have the private key, which is encrypted. These wallets can be hosted on Android or iOS apps, on websites, or on external drives, much like network-disconnected USB drives (also known as “cold wallets”).
Alternative currencies
Crypto-currencies are alternative currencies in the sense that they are not legal tender: their value is not indexed to the price of a precious metal or to that of a state currency, with the exception of stablecoins which, as their name suggests, exhibit price stability. Also, crypto is not regulated by any financial institution. And yet, the security and transparency of their transactions are often put forward as the first rank of the advantages of crypto-currencies! These two assets are indeed intrinsically linked to crypto, which allows secure, verified and recorded operations on the blockchain.
Decentralized currencies
Cryptocurrencies operate without intermediaries, i.e. without the intervention of banks or governments. Individuals can transfer values between themselves independently. This is called a peer-to-peer system.
Pricing Cryptocurrencies
Since crypto-currencies are not subject to state control, they escape monetary policies. Their value is determined exclusively by supply and demand: buyers and sellers offer a price based on their analysis of the market. The price of crypto-currencies is therefore influenced by the analyzes that buyers and sellers make of the market. To do this, they will rely on different tools
and analyzes that will influence their decision.
