Yuri Popovich had watched his neighbors’ houses burn to the ground in Kyiv, and he needed a safe place to put his money. So he did what millions of amateur investors have done in recent years: he turned to cryptocurrency.
“It was impossible and dangerous to store money in the form of banknotes. There was a high risk of theft, we also had cases of looting. That’s why I trusted a “stable and reliable” cryptocurrency. “Not for speculation, but just to save,” he said.
The digital asset Popovich chose in April was terra, a “stable coin” whose value had to be pegged to the dollar.
It collapsed in May, causing a devastation in the cryptocurrency market, whose victims include Popovic. He lost $ 10,000 (£ 8,200).
Questions and Answers
How crypto works
show
What is a cryptocurrency?
A cryptocurrency is a decentralized digital asset built on a blockchain. It is the first and still the largest cryptocurrency bitcoin, and its blockchain is protected by miners using a proof of operation system. But there are other cryptocurrencies. Ethereum is the second largest and is used as a platform to build other decentralized projects, such as stable coins,, NFTs and shitkoyni.
What is a blockchain?
A blockchain is a decentralized registry that tracks ownership of a cryptocurrency or other digital asset. New transactions are added at the end of the blockchain, and the use of cryptography contains a record of each previous transaction. There is no single “official” blockchain, but the network as a whole is maintained consistently through a consensus algorithm as proof of operation.
What is proof of employment?
Proof of work is the consensus algorithm used to protect bitcoin, etherium and many other large cryptocurrencies. He asked the “miners” who run the computer nodes that make up the physical infrastructure of the blockchain network to burn electricity efficiently to generate digital raffle tickets. Every 10 minutes, one of these raffle tickets wins the prize – a cryptocurrency prize and the right to check the next block in the blockchain. The system means that it is very expensive to attack a cryptocurrency directly: you have to spend more electricity than any other miner combined.
What is a miner?
The miner is the person who manages the cryptocurrency node. They use specialized computers called digging equipment to perform a specific mathematical function called “hashing.” The network treats the results of these hashes as lottery tickets and every 10 minutes a miner declares himself the winner. For bitcoin miners, this reward is currently $ 125,000, which stimulates the bitcoin network as a whole to consume about 130 TWh per year, around electricity consumption in Argentina.
What is ethereum?
Bitcoin’s most important successor, ethereum, has been described by its supporters as a “global computer”: in addition to simple transactions, users can create “smart contracts,” small programs that run on the web. These smart contracts can be linked together to create entire “decentralized applications” that run without a separate computer in charge of them, and they can also be used to create new cryptocurrencies and digital assets that live in the Ethereum blockchain. instead of needing more miners and a new network.
What is a stable coin?
A stable coin, such as a tether, USDC or UST, is a specific type of cryptocurrency designed to have a fixed value. They play an important role in the crypto economy, as they allow people to “withdraw money” from risky bets without going through the hassle of converting money back into conventional money. But maintaining a stable value is difficult: it requires a large centralized organization to work as a bank, keep a lot of reserves on hand and spend them to stabilize the currency. “Algorithmic” stable coins, such as UST, also known as terra, have been tried, but have an unpleasant tendency to enter a “spiral of death”, where a collapsing value creates more tokens, pushing out a lower value.
What is NFT?
An NFT or irreplaceable token is a type of digital asset that can be traded as a cryptocurrency, but is not “exchangeable” like money: one NFT is different from another. Early NFTs resembled collectibles, such as digital football stickers, or were used to trade in works of art, but the lack of any functional utility led to a boom and collapse of the sector in 2021. The latest generation of NFTs is trying to focus on “utility”, offering membership benefits or technological benefits to holders.
Thank you for your feedback.
Popovic says his losses have been “devastating”, although donations from sympathetic viewers on social media have helped offset some of the shortfall. He says: “I stopped sleeping normally, I lost 4 kg, I often have headaches and anxiety.”
Popovic is one of many experiencing the deep cold of the current crypto winter, more than four years after the cornerstone of the market, bitcoin, marked its first digital freeze, falling from its then-peak.
Graph of the value of cryptocurrencies
It then tore long, but came to a halt as Bitcoin fell below the $ 20,000 mark at one point this month, well below its nearly $ 69,000 peak last November.
The decline was sharp and spectacular: a common market that was valued at more than $ 3 trillion just six months ago now costs less than $ 1 trillion.
Crypto boom: a new digital economy
The beginning of the last crypto boom had all the hallmarks of being another example of the “Robinhood economy,” named after the popular American stock trading app.
Bored white-collar workers stuck at home due to pandemic blockades but overwhelmed by disposable income turned to daily trading as a way to spend their time. Subscribers to the r / WallStreetBets forum on the popular online discussion site Reddit doubled in 2020 and then quadrupled in the first month of 2021 as a small army of retail investors invaded assets as diverse as the then-bankrupt company. for car rental Hertz, troubled video game retailer GameStop and electric car maker Tesla, pushing the latter from $ 85 at the start of the pandemic to a peak of $ 1243 by the end of 2021.
Cryptocurrencies also benefited from the jump in daily trading. Bitcoin rose from a low of $ 5,000 in March 2020 to over $ 60,000 a year later. The currency has had a similar sharp rise before: in 2017 it rose 20 times, to its then peak of 19,000 dollars. But in the latest ethereum boom, cryptocurrency number two, there was an even more impressive climb, from just $ 120 to a peak of almost $ 5,000 in 2021.
Bitcoin trading has exploded over the last decade. Photo: Sascha Steinbach / EPA
Cryptocurrency is the name of any digital asset that operates as bitcoin, the original cryptocurrency that was invented in 2009. It has a “decentralized register” that records who owns what, built into a “blockchain” that secures the entire network by ensuring that transactions are irreversible, once made. A staggering amount of variation has emerged over the years since then, but the core – the blockchain concept – is remarkably stable, in part because of the social consequences of truly decentralized networks being immune to government oversight or regulation.
Where 10 years ago people were just talking about bitcoin trading, the space has grown. In addition to the cryptocurrencies themselves, the sector has evolved into a complex ecosystem.
It includes Web3, a wider choice of applications and services built on cryptocurrencies, DeFi, an attempt to launch an entire financial sector from code rather than contracts, and indispensable tokens (NFT), which use the same technology as cryptocurrencies to trade items, not money.
The flow of money laundering in the world of cryptocurrency has done more than just inflate the book wealth of existing shareholders. Instead, it led to a surge of interest and funding for a huge range of projects that aimed to take advantage of the core technology of cryptocurrencies.
Blockchain entrepreneur Vignes Sundaresan, also known as MetaKovan, shows Beeple NFT, which he bought for $ 69 million. Photo: Roslan Rahman / AFP / Getty Images
For a generation of new investors, the opportunities for “decentralized financing” of the sector were attractive. Created on the “programmable money” of the cryptocurrency Ethereum, “DeFi” [decentralised finance] the sector is an attempt to expand the ethos of bitcoin against establishment to cover the whole economy.
Take the relatively small sector of the crypto market known as NFT.
NFTs chart
A product dating back to 2014, NFT uses the technology used to create cryptocurrencies, but allows creators to link unique assets to the blockchain instead of money similar to currencies.
This means that NFTs can be traded, which are works of art, virtual collectibles or even function as tickets for events or club membership. And like cryptocurrencies, they can be bought or sold on open exchanges, kept under a pseudonym and packaged or securitized into complex financial instruments.
NFT in the Bored Ape Yacht Club collection regularly sells for $ 1-3 million apiece. Photo: Property Of Nexo / Reuters
Boom to boom, individual NFTs are sold for stupid amounts of money in mid-2021.
A token representing years of work by digital artist Beeple, sold for $ 69 million; another related to the first tweet sent by Twitter founder Jack Dorsey was purchased for $ 2.9 million. Individual NFTs in the Bored Ape Yacht Club collection – the most consistently coveted examples of NFT “profile photos” designed to be used as a pre-packaged online identity – sell regularly for $ 1-3 million apiece.
But by early 2022, the NFT bubble seems to have popped. The “minimum” prices for large NFT collections fell and while many large NFT acquisitions remained in a private collection, those that were put back on the market performed poorly: Dorsey’s tweet was …
Add Comment