Is the money in my bank account really mine?
Have you ever asked yourself this question: Is the money in my bank account really mine? And in my control? The answer is no. You probably have all your money stacked in a bank account. But where really is your money? What if the bank goes bankrupt? Which happens in banking. What do you do then? What if the bank announces that they will shut down the digital bank for 24 hours? This theoretically means that for those 24 hours, the money isn’t even yours.
«You have 1 million dollars in your bank account, but you can only make a transaction of 20 000 dollars max. If you want to do more than that you have to go to the bank and sign some papers and prove how you got the money. A million questions back and forth. When the real question should be; is the money really yours?
What can solve these problems?
Cryptocurrencies solve all these problems. The way cryptocurrencies operate is that there is no single centralized clearing authority or bank. Instead, you have these knows what the data centers and mining companies are effectively doing. They are securing the network.
To easier understand the benefits of cryptocurrencies, let’s explain the basics:
How does the Bitcoin network operate?
So the way a bitcoin or the cryptocurrency network operates is; every mining machine is a node in the network. All of these are connected to the same bitcoin network. Now, each one of them is profounding something called proof of work:
A mathematical algorithm secures the bitcoin network. This algorithm is called SHA-256 and throws a complex mathematical question. Every one of the hundreds of thousands of machines globally is trying to answer this question. The first machine to answer the question correctly gets the right to create the next transaction block.
What is a transaction block?
Think of it simply as one page in a book of the ledger, and you get to write the next blank page. How do you write it? Pretty simple. The bitcoin algorithm also has a record of all these transactions that are waiting to happen. So I needed to send you a BPC; I sent the message using my wallet. Now that transaction sits in something called a mempool.
A mempool is the same thing as sending you money after 5 pm Singapore time today. The transaction will not happen immediately. It will happen the next business day. Now the Singapore dollars sit somewhere in the bank system, waiting for people to return to work at 9 am to process it. It is the same thing.
I send a transaction and sits in something called the mempool. Every miner has access to the same mempool. The miner’s machine that wins the right to create the next block picks all the transactions and chooses which transaction to select from the mempool.
Now that you know the basics of Bitcoin. Let us explain the benefits of it.
The benefits of cryptocurrencies
A permanent record
The writer chooses the transaction which is giving him the highest fees. You can only put so many transactions in the block; it gets full and locks the block. It is all automatic – it is all algorithm-based. Now, this is the beauty. The record of the block that the machine created gets transmitted into the entire network. Then there is an algorithm process where all the other miners validate my block. Once everybody has validated, the block becomes a permanent record on every miner’s ledger.
No centralizing authority
There is no centralizing authority carrying the ledger, and this means that the transactions don’t get lost and the network doesn’t die. So the miners are providing superiority to the network. So the more spread out it is, the more decentralizing it is, the more miners in it, the more secure the network is.
It is incorruptible
It is incorruptible because of this consensus mechanism where everybody has to agree, and then it gets recorded. There is something called the 51% attack which means; if someone theoretically controlled 51% of the network, I could have all my miners create transactions and put that into the record, and I can approve it. It is like I am both creating a transaction and approving it. But that’s impossible because it is such an extensive network, which makes it even more secure.
It’s like a transparent box. Suppose you put all your transactions in it and lock it. Everybody can see it, but nobody can touch it or change it.
A transparent network
A miner is enabling the transactions. They are securing the network. The bitcoin you receive is the reward for doing this. Mining is not the same as printing money. It is basically the job that the central bank is doing. It is an entire financial system. It is open-source. You can see it, but not change it. It is the most transparent network.
If you send 5 dollars in bitcoin, everyone knows that this money went from this wallet to this wallet. They don’t know who owns the wallet, but they know that the money went from wallet A to B.
The blocks are immutable.
If you send your bitcoin to someone else, they are gone. You can not claim them back. A transaction is not reversible. That is why the locking of blocks is called immutable. Today with banking systems, they can reverse it without your permission. In crypto, the government can not access your money and take it.
These are some of the benefits of cryptocurrencies. Now, there are many critics out there. And a lot of the criticism is related to the connection between criminal activities and cryptocurrency.
Is Bitcoin really a heaven for criminals?
Rather than talk about critics, let’s talk about the criticism. One of the media criticisms against bitcoin is that it is used for illicit and illegal activity. That means we are taking bitcoin as a currency. The currency that currently conducts the world’s largest share with unlawful activity is USD. So we can compare the amount of USD being used in illicit activity to the amount of bitcoin.
– 2.1% of all cryptocurrencies transactions volume roughly 21.4 billion dollars, was considered illicit activity (2019)
– 0.34% of all cryptocurrencies transactions volume roughly 10 billion dollars was considered illicit activity (2020)
– 2-5% of global GDP is connected to money laundering and illegal activity. Wich is 1.4 trillion dollars.
Bitcoin isn’t even half of the lowest estimated of all money laundry enlisted activity in the world.
How are most illegal activities and money laundry done?
It is being done by actual physical catch, which is not recorded. In Singapore, you have people coming in from the mainland with suitcases full of cash and buying property. It is allowed. But with Bitcoin, you can not hide a transaction. I may not know who did the transaction, I may not know who received the transaction, but I know it accrued. We can not do that with traditional financial systems. It is not easy. Shelf companies above-shelf companies filter bank accounts. But in Bitcoin, there is one person in control of that wallet, and that’s the one with the key.
Kryptovault position in this marked the following years.
In the next five years, we will be among the top five mining businesses in the world. We are uniquely placed in the significant global economy with complete transparency and legitimacy.
Norway has 95% renewable energy. In other countries, it is often coal-based and not renewable. Norway is exceptional for mining crypto. The demand will always be there, and in the future, Bitcoin will develop into a payment solution, and the demand will even expand more.