Step one to making my own crypto is easy. I need to understand what it really is, together with understanding what it is not. Money is something people agree has value. In the distant past, coins were often made from valuable metals such as gold or silver. Later, paper money became popular because it was easier to carry. At first, some paper notes could be exchanged for a fixed amount of gold held by a bank.
Over time, most countries abandoned the link between money and gold. Today, the euro and most other currencies are valuable because people trust that others will accept them in exchange for goods and services.
Cryptocurrencies work differently. They are digital money that exists only on computers. There is no central bank printing them and no vault full of gold supporting them. Instead, cryptocurrencies rely on a network of computers that maintain a shared record of ownership, known as a blockchain. This record makes it possible to transfer coins directly between users without needing a bank to keep track of balances.
Like traditional money, cryptocurrencies have value because people are willing to accept, trade, and use them. Whether that value will rise or fall depends entirely on supply, demand, confidence, and usefulness.
In the next post, we’ll look at the blockchain: the technology that allows cryptocurrencies to work without a central bank.