What is Cryptocurrency, Bitcoin & Blockchain? Leeds miner explains

“Crypto will be responsible for the most under 18 millionaires,” explains Christopher Hitchens who discovered cryptocurrency a few years ago after working in investment banking and running his own estate agency.

Serial entrepreneur Chris who runs a Yorkshire software company, has been building his Mineeezi business all around trading, crypto and blockchain since the start of the pandemic.

But what are they?

Blockchain, Bitcoin and Cryptocurrency: explained

“Blockchain is simply a database that’s publically locally available,” said Chris who also runs the EEEzi Crypto podcast which aims to ensure “even a 9 year old can understand Crypto.”

He added: “I like to break it down and make it simple to understand.

Crypto is a digital currency that is an alternative to a physical currency. Its use is to purchase goods and services.

“Now to ensure these online transactions are secure it utilises technology known as ‘blockchain’ (it's like a ledger) which works alongside cryptography that secures the transaction to enable users to record their transactions,” said Chris.

A decentralised bank account

Until now, people have traditionally deposited money into a bank account.

“That bank would keep a ledger of transactions, payments, who owes what and so and so forth.

“That ledger is what you see when you open up your banking app or, if you’re more traditional, take a look at your paper statement,” said Chris.

He said that the traditional ledger is very similar to ‘blockchain’ in cryptocurrency. The only difference is that, rather than the bank controlling the ledger, it’s a decentralised system which is openly visible worldwide.

“Transactions are processed more efficiently, as one person connects directly with another person i.e bypassing the ‘middleman’ the banks (you also save on expensive transfer bank fees), this is known as a peer-to-peer (p2p) transaction.”

How secure is Cryptocurrency?

Chris said that Crypto could prevent the NHS from being hacked.

“The main advantage of peer-to-peer transactions is they are more secure, convenient, speedier, cheaper, and their ease of use.

“Think of it as a network of connected computers that can validate transactions simultaneously at the same time so no one can cheat the system. Why do you need this you might ask.

Enron, which was dubbed as one of the biggest audit failures in US history, collapsed due to accounting fraud.

“They had one set of accounts for them and one for the public. With crypto you can't do this,” explained Chris.

“There is one set of immutable accounts - aka the blockchain - that cannot be edited after the data has been written to the blockchain.”

For this reason Chris said patient records could not be hacked and, elections could not be rigged.

He warned however for those using crypto to never give away your security key to anyone. This is the safe code to access your accounts.

What is mining?

Chris invested in his own mines at the start of the pandemic when he decided to focus on cryptocurrency. But the mines he ordered from China never came.

“I was so excited when I ordered them and I had invested thousands,” said the Bradford-born entrepreneur.

But after experiencing setbacks in his previous business, he knew he had to find a solution, so he decided to develop his own mines.

What exactly is mining?

“Miners validate the transactions between people using the network. Since the beginning of time, 2009 in bitcoin's case.

“The blockchain is composed of these little blocks, and every ten minutes, every transaction that happens within those 10 minutes is then placed into that next block.“

“And then that block has a computational puzzle that needs to be solved and all of these transactions need to be verified in the block. Then once these transactions are verified, that block puzzle is now solved.

“As a reward, whoever solved that algorithmic problem gets a reward in Cryptocurrency. This is how we also mint new Crypto Coins too,” added Chris, who said that Crypto is easy once you get into it.

How do I start with crypto?

“When you make a transaction using cryptocurrency, that transaction will be validated using your own unique security key which identifies you.

“From there, other users can authenticate your transactions and add them to the blockchain.”

“Every transaction has its own unique security key which keeps it secure. Each transaction boosts the strength and reliability of that cryptocurrency which is associated with the blockchain,” said Chris.

Why was crypto created?

Crypto rivals centralised currency and banking because it’s a “deflationary asset.”

“Let’s look at the dollar for example. When it was first created, one dollar in the bank was worth just that. One dollar.

“Today, a dollar is effectively worth two cents.

“We’ve probably all laughed when we’ve heard children say ‘if we haven’t got enough money, why don’t we just print more?’

“Well, actually there’s an element of truth in that. Because there’s more physical Dollars in circulation every year, the value of those dollars diminishes - to the point where a Dollar is now worth two cents,” explained Chris.

This is inflation because every year, that physical currency that you hold in a bank is worth less and less.

If you were to buy a house in 1970, the average price was £4,000. Today, that average price is £268,000. So that £4000 would only buy you 1.5% of that house now, added Chris.

“This is exactly why cryptocurrency was created; so that inflation could be removed completely from the equation.

“To do that, the number of any given cryptocurrency in circulation is capped. Eventually, once the number of crypto coins reaches a predefined limit, then no more of that crypto will be issued. That way, the value can’t diminish as a result of inflation.”

“It’s a bit like rare or limited edition products, take baseball cards as example. The reason that they are so sought after and expensive is because they are limited as to how many are in existence.

“That same premise can apply to crypto. It’s here as a secure alternative to mainstream physical currency.”

What is Bitcoin?

Blockchain is essentially a database that is distributed on ledgers across the world. And the first coin created on it was Bitcoin, which is used as an inflationary hedge i.e. a store of value.

“Bitcoin is a bit like gold,” said Chris.

“Now in years gone by gold was used as a store of value, it was the number one store of value in fact still is by total market cap.

“But now we also have Bitcoin, which is used as a store value, a bit like gold, some people call it digital gold . And this is why more and more companies are investing in Bitcoin. If they leave their assets in cash on their balance sheets, the actual value is going down year on year.”

Who created Bitcoin?

Satoshi Nakamoto (still to this date no one knows who he really is).

This equally cryptic founder “worked out that we needed a currency that was effectively deflationary now,” said Chris. He also solved the 'double spending problem' which meant people could not copy or forge bitcoin.

“Therefore Satoshi in 2009 launched Bitcoin, which is limited to 21 million coins - you cannot get anymore once we get to 21,000,000, it will run out of coins. However, you can buy a fraction of bitcoin,” added Chris.

Facts about Crypto, Blockchain and Bitcoin:

Cryptocurrency is a decentralised digital currency which means unlike traditional currencies that are backed by the government, they cannot be manipulated. ‘Blockchain’ and works alongside cryptography to enable users to record their transactions securely. There are over two billion people worldwide they do not have access to ATMs. Cryptocurrency could potentially benefit this market as it would enable them to transfer currency more efficiently. Cryptocurrency cannot not be forged There are over 10,000 different varieties of cryptocurrency. If you add all the world’s total value of cryptocurrencies together it would be worth nearly $3 trillion. Peter Thiel (co-founder of PayPal and Palantir Technologies and also the Managing Director of venture capital firm Founders Fund). ‘I do think Bitcoin is the first encrypted money that has the potential to do something like change the world.’ Have you invested in cryptocurrency? Let us know @yorkshirepost @sophiemeilan_