The Book about Cryptocurrency №1. Second edition expanded

The value of currency tokens, such as bitcoin, is determined primarily by their ability to function as currency and a store of value.

The value of service tokens is determined by the popularity and usefulness of the network: for example, the amount of data that is hosted on the blockchain and the amount of information that is processed, as there are parties willing to pay fees for processing, validation, transmission and protection of data. These could be decentralized exchanges or companies hosting supply chain data on the blockchain, etc.

Asset tokens can be linked to the value of the real assets they represent.

Asset tokens can be valued based on investor sentiment and the progress of the project itself. What plays a role here is whether they are used in commerce and accepted by the real world, what voting rights their holders have, the potential and direction of the company, etc.

So what influences the price of tokens?

Now that we know what the source of value of tokens is, it’s time to ask this question.

Different projects and tokens may have different incentives or economic models that affect the price. Speculation aside, there are certain technical factors that affect the price regardless of investor sentiment.

Demand and consumption. This is likely the most significant factor in the question of token value, especially these days when the market is purely speculative in nature.

Popularity/utility. This factor has to do with answering the questions of whether there is any activity on the network and how widespread the token is.

Burn rate. Do tokens lose value over time? At what rate?

Circulation and reserves. How many tokens are in circulation? Is there an «untouchable reserve»?

Generation of secondary tokens (such as NEO/GAS, etc.).

Mining/premining. How many coins have already been released and what is the release schedule? Or have they all been mined already?

Satoshi Nakamoto – human or artificial intelligence?

Satoshi Nakamoto is considered to be the creator of Bloxxhain and Bitcoin technology. Until now, no one knows whether it is one person, a group of programmers or artificial intelligence.

There are a lot of facts, rumors around this name. There were several attempts to find out who is hiding behind this name, but they were unsuccessful.

According to one version, Satoshi Nakamoto is from Japan, but currently lives in the northeastern United States. Periodically, someone tries to catch the hype on Satoshi’s name and declares himself to be him. In the US, journalist Leah Goodman spent months investigating and looking for traces of Satoshi. She eventually managed to find a man of Japanese descent named Dorian Satoshi Nakamoto. However, the accidental namesake of the genius of the cryptoworld himself admitted that he had never heard anything about bitcoins.

Periodically, the media published articles proving that under the name of Nakamoto hides professor of economics Nick Sabo (Sobo), a mathematician from Japan Motizuki Shinite, the owner of crypto exchanges Ross Ulbricht and many others. The press also suggested that Nakamoto is Ilon Musk.

However, all these investigations remained only versions, not supported by reliable facts. The Satoshi candidates themselves deny their involvement in the creation of blockchain and bitcoin.

What do we know about Satoshi Nakamoto now? It is known that he owns almost one million bitcoins, making him one of the richest people in the world. In 2008, when blockchain came into existence, he was 37 years old.

As of 2010, Satoshi Nakamoto has officially stepped aside. No new publications or statements signed with that name have appeared again.

Technically, when bitcoin was created, there was a limit of 21 million coins. Satoshi also stipulated this rule.

If Satoshi Nakamoto decides to sell all his bitcoins at once, it will crash the cryptocurrency market and devalue bitcoin to almost zero.

Hopefully this won’t happen in the near future, bitcoin will remain the flagship of cryptocurrencies and what helps the whole system balance.

Is it possible to touch cryptocurrency?

Bitcoin and any other currency cannot be touched in person, nor are they minted by any mint in the world.

Although the most widespread and stable cryptocurrencies have their own symbols, on par with the dollar ($), pound (£), euro (€), ruble, and so on.

Bitcoin and other cryptocurrencies exist only in virtual reality. That said, they can be exchanged for real money.

Another difference between crypto and fiat money is that they arise themselves in the digital space. And anyone can produce (mine) bitcoin. No central bank or state is needed for this.

Cryptocurrencies appear through ICO (investment), as a result of mining (maintenance of special servers) and forging (forging) – the formation of new blocks (branches) in already existing digital currencies.

Nevertheless, today bitcoin and other currencies are quite realistically turning into living money – into houses, apartments, trips, yachts and other pleasures.

By the way, in the first year of Bitcoin’s creation, a legendary transaction was realized – the first purchase of real goods for cryptocurrency. For 10,000 bitcoins were bought two pizzas totaling $41.

So «wastefully» spent his savings American programmer Laszlo Hanyecz (Laszlo Hanyecz). The thread on the forum is still available at the link – https://bitcointalk.org/index.php?topic=137.0 (https://bitcointalk.org/index.php?topic=137.0).

Now convert that to the current exchange rate and grab your head. Today (July 2023 – ed.) 10,000 bitcoins are equivalent to $300 million US dollars, and the total capitalization of all cryptocurrencies is $1.2 trillion.

The most popular types of cryptocurrencies

According to https://coinmarketcap.com/, in July 2023, there are more than 10,000 cryptocurrencies registered in the world.

Of course, their value varies. And the fate of most small coins can turn out any way you want. Some coins will take off, some will disappear from the lists of exchanges. But nevertheless, the fact remains that blockchain technology allows you to create an unlimited number of types of crypto-money, the capitalization of which, depending on the exchange rate of major currencies (Bitcoin, Ethereum, etc.), the total approaching $ 300 billion (at the time of writing this material – this price is always fluctuating).

At the same time, the cryptocurrency market is characterized by high volatility. And this means strong fluctuations in the rate. In a matter of days, or even hours, the same bitcoin can collapse by several hundred dollars, and may even grow.

Hence, the potential of each new moment is quite high. It can grow by 50, 100 and even 1000 times. This is what makes it possible to move crypto markets and make money from them.

Each type of cryptocurrency has its own pros and cons, its own value and its own potential for growth.

But collectively:

● they are all universal,

● they can be exchanged for either other cryptocurrencies or fiat money,

● they can be saved,

● they can be used to pay for goods and services,

● their exchange rate is subject to supply and demand.

What are the most popular currencies today? Whose capitalization (the total value of all issued cryptocurrency coins) exceeds a billion dollars?

So far, the top 10 looks like this (data as of July 2023):

• Bitcoin.

• Ethereum.