The Importance of Cryptocurrency Function

The Importance of Cryptocurrency Function

It may be said that to understand a cryptocurrency is qualitatively different from understanding other commodities and currencies. It would be like needing to know how Gold functions at a deeper level of description than this: it is a precious metal mined from the earth, created from stars, that is relatively rare and has important industrial uses and is a highly desired and valued ornament. Which is to say, cryptocurrencies can be hard to understand.

A Forex pair is slightly less concrete, but it is also relatively simple, it is one currency valued relative to another, backed by and affected by economies and within them central banks. But what is a cryptocurrency ? The first issue is that they are really new. Currency exchange and Gold have been a round for a really long time. Obviously Gold has been around far, far longer, but in terms of its existence as a valued commodity, perhaps not that much longer. They have a kind of mature existence, their functionality is well defined and developed. It may change, but slowly.

However cryptocurrencies are an idea, given existence, an idea of using the Internet to abstract certain functions involved in using a currency to exchange value, to in effect automate some things which in the use of a currency were (and are) determined and controlled (for example payment processing and the creation of the currency). Cryptocurrencies are also involving in and coming up against issues in this kind of abstraction, and some may be blurring the distinction between centralised control (and the advantages it has) and decentralised operation. However this may not matter so much if abstraction is preserved.

But behind a cryptocurrency is the Internet, algorithms and programming languages, which have a deeper history. That foundation brings a pre-compiled maturity to their function, as it were. This would seem to matter. But the recent creation of them also matters, as it is not set which way they will go, whether closer to a currency as it is understood or finding ways to stay functionally decentralised and functionally effective. So to answer the question it does matter what they are, but what that its function is, is perhaps not set in the way Forex pairs or Gold, for example, are.

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