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1. Beginner Course

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  1. 1. What are these cryptocurrencies?
  2. 2. Bitcoin - the story of a technological revolution
  3. 3. Satoshi Nakamoto, who is the creator of Bitcoin?
  4. 4. Vitaly Buterin – the creator of Ethereum
  5. 5. What is blockchain, and how does it work?
  6. 6. What is an NFT token?
  7. 7. What is money?
  8. 8. Cryptocurrencies vs fiat money, which will win?
  9. 9. What is DeFi (Decentralized Finance)?
  10. 10. DeFi: opportunities, advantages and disadvantages of decentralized finance
  11. 11. What is an altcoin?
  12. 12. Stablecoins - What are they?
  13. 13. Cryptocurrency wallet - what is it?
  14. 14. Why do we talk about bull and bear markets?
  15. 15. Security in the crypto market - what rules are worth following?
  16. 16. What is the seed phrase in cryptocurrencies?
  17. 17. Dogecoin and memecoin - what are they?
  18. 18. What is a Ponzi scheme?
  19. 19. What is a Soft and Hard Fork?
  20. 20. Blockchain - examples of use
  21. 21. Is blockchain safe?
  22. 22. What are the types of blockchain networks?
  23. 23. What is blockchain network congestion, and how does it work?
  24. 24. Cryptocurrency wallets: Hot Wallet vs. Cold Wallet - key differences!
  25. 25. Cryptocurrency wallet diversification
  26. 26. Halving Bitcoin - what is it, and how does it affect the price?
  27. 27. Blockchain versus databases: key differences!
  28. 28. How do you transfer cryptocurrencies?
  29. 29. The most important cryptocurrency acronyms/slang you need to know!
  30. 30. The memecoin story: madness or great investment?
  31. 31. What is Ethereum? 
  32. 32. Everything you need to know about gas fees in Ethereum!
  33. 33. Gavin Wood: Blockchain Visionary and Co-Founder of Ethereum
  34. 34. Decentralized Apps – what are they?
  35. 35. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  36. 36. What is the Proof of Authority (PoA) consensus mechanism?
  37. 37. What is Proof of Burn (PoB)?
  38. 38. What is a whitepaper? What is its purpose, and how do you write it?
  39. 39. Smart Contracts - what are they?
  40. 40. Know your customer (KYC) and Anti-money laundering (AML) what are they in the cryptocurrency industry?
  41. 41. Blockchain and NFT games - how to make money on them?
  42. 42. Liquidity in the cryptocurrency market
  43. 43. Inflation and its effects on financial markets
  44. 44. What is stagflation and why does it have a negative impact on the market?
  45. 45. What are utility tokens and what use do they have in the cryptocurrency sector?
  46. 46. What is cryptocurrency mining?
  47. 47. What is the mining difficulty?
  48. 48. What is compound interest, and how does it work?
  49. 49. What Are Privacy Coins and Are They Legal?
  50. 50. What is CBDC - central bank digital money?
  51. 51. What is Cryptocurrency Airdrop all about?
  52. 52. Key differences between ICO, IEO and STO
  53. 53. What are decentralized DAO organizations, and how do they work? What are DAO tokens?
  54. 54. What is EURT? How does it work?
  55. 55. What is the difference between Circulating Supply and Total Supply?
  56. 56. Snapshot from the world of cryptocurrencies - what is it?
  57. 57. What is the Fear and Greed index for cryptocurrencies?
  58. 58. APR versus APY: what is the difference?
  59. 59. What is an Initial Farming Offer (IFO)?
  60. 60. What is Regenerative Finance (ReFi)?
  61. 61. Who Is Craig Wright, the Alleged Creator of Bitcoin?
  62. 62. What Is Bitcoin (BTC.D) Dominance?
  63. 63. Michael Saylor, Self-Proclaimed Bitcoin Maximalist
  64. 64. Bitcoin Pizza Day
  65. 65. AI blockchain - a new look into the future?
  66. 66. What is WorldCoin? Everything you need to know about this cryptocurrency!
  67. 67. Azuki NFT collection guide: everything you need to know about it!
  68. 68. The 10 most expensive non-fungible tokens (NFTs) ever!
  69. 69. The Bored Ape Yacht Club (BAYC) - the story of the popular NFT collection!
  70. 70. CyberPunks - the story of the most popular NFT collection in the crypto industry!
  71. 71. NFT Art: The digital art revolution - history and examples!
  72. 72. Who is Changpeng Zhao, CEO of Binance?
  73. 73. Who is Brian Armstrong - CEO of Coinbase?
  74. 74. Who is Galy Gensler and the SEC? How does the Securities and Exchange Commission (SEC) affect the cryptocurrency market?
  75. 75. Web3's most popular social media platforms! Will they replace the platforms we know?
  76. 76. What is IoT - the Internet of Things?
  77. 77. On-chain analysis in the cryptocurrency world: Everything you need to know about It
  78. 78. Can you pass on your cryptocurrencies after death? How do you pass on a cryptocurrency inheritance?
  79. 79. What is the Howey test? What application does it have in cryptocurrencies?
  80. 80. The use of blockchain technology in the world of sport
Lesson 7 of 80
In Progress

7. What is money?

Any form of money acts as a medium of exchange, store of value, and unit of account. Like everything, money has evolved over the centuries from “livestock” barter to “computer code” in the form of cryptocurrencies. 

Barter – the first form of money

Money is anything that can be used as a medium of exchange. Interestingly enough, recent research suggests that money only came into existence after the invention of debt. At first, we had a form of barter – people exchanged items to which they assigned equal value. 

In the earliest eras of civilization, societies denominated money in livestock such as cows, goats, and camels. Thereafter, everything from kauri shells to salt was widely used as a form of money before giving way to a more familiar form – precious metal coins. 

Coins – the first revolution of money

The difficulty of barter led to the creation of coins made of precious metals. As a result, around 700 BC, the first coins began to be minted. A small town called Lydia still has the oldest archaeological evidence of the first coins in the world.

Later, with the conquest of Lydia by the Persians, they started minting coins, and from there the expansion of coins around the world began to grow. The Greeks, Romans and Chinese joined the revolution. These early coins were usually made of precious metals. The Lydians minted their coins in gold and silver, weighing from about 4 grams to 60 grams. This all depended on the quality of the material, the metal alloy, and the size of the coin struck.

New coins quickly became a very desirable medium of exchange. This greatly simplified the buying process and put aside some of the injustices that had taken place in the barter trade.

The origin of modern money

The concept of banks dates back to the very origins of money in Mesopotamian times (loans were made with interest). In the Middle Ages, they played a fundamental role in the evolution of money with the invention of paper.

The first banknotes, of which there is evidence, appeared in Sweden in 1661 (17th century), by the hand of the moneychanger Johan Palmstruch. He gave them as “receipts” to those who deposited gold or other precious metals in the Stockholm Bank, which he founded.

This is where paper money secured by gold is born. This means that people’s gold coins, which were heavy and difficult to divide, are stored in well-protected safes in exchange for documents that indicate something like: “This document is equivalent to this amount of gold in bank X”.

It all grew in strength until the death of King Charles X Gustav in 1660, when the government decided to mint new copper bars of lesser purity. Depositors gathered to withdraw their best copper bullion, but because Palmstruch had borrowed it, they couldn’t do it. For this reason, in 1661, the ingenious Palmstruch decided to disentangle the issuance of “bills” from the deposits in such a way that the only guarantor of the bills was the bank itself. These bills are Kreditivsedlar and secretly represent the birth of fiat money (backed only by faith or trust).

Palmstruch did not expect that this money would trigger a new phenomenon in Sweden: inflation. After a tumultuous period of economic crisis in 1667, the time came when the bank, unable to meet its obligations under Kreditivsedlar, went bankrupt. Palmstruch was initially sentenced to death, but was later pardoned and sent to prison.

The Rise of the Central Banks

But the Swedish parliament recognized the power of banking and decided to establish the first ever central bank: the Swedish Assets Bank, in 1668, with exclusive rights to issue banknotes. Years later, the institution was renamed the Central Bank of Sweden, which in 2018 celebrated 350 years as the world’s oldest bank. Until in 1694, which was 26 years later, the Bank of England was established. It was a central bank that has served as a model for most central banks around the world.

This meant that the creation of paper money was privatized and institutionalized in governments, making it impossible for any person to issue money. Only a country’s central bank would have the ability to issue valid money, really ensuring that there was gold on which the bills were based.

Gold Standard

Until recently, banknotes were backed by gold, which was known as the gold standard, meaning that every issue of money made by a country’s government had to be backed by a certain amount of gold. This lasted until 1971, when the United States formally withdrew this promise, stopping the use of gold as currency backing.

Although there are those who believe that the euro or dollars are backed by gold, this is not the case. Money as we know it today is not backed by anything; it is issued by a country’s central bank, which from its position of power determines that it is money that people should use.

Fiat money – FIAT

Today, fiat money (e.g., the zloty, euro, dollar) – government-issued legal tender – represents the most dominant form of money. For many, paper bills and coins are the only forms they have ever known. Fiat currency has replaced gold and commodity money. Paper fiat money originated in China (11th century) and did not reach Europe until the 17th century. 

Today, more than 150 currencies are used worldwide, and 70% of the world’s monetary value is denominated in U.S. dollars, euros, British pounds, Japanese yen, and Chinese yuan.

In addition to the traditional cash exchange, transactions using FIAT take place through an intermediary – the banking system, financial institutions, or apps are necessary to complete transactions. When we use a card, we need a third-party company like VISA to make transactions or pay for goods and services. In such cases, we talk about centralized finance. 

The central banks of many countries have started to issue money without control, and we are facing the first problems of an exacerbated devaluation of purchasing power. Even the dollar itself, the standard currency, is measuring up to this reality. So much so that $100 in 1956 would be the equivalent of $956 today.

This issue, along with other unhealthy practices in economics, has led us to economic crises like the one in 2008. Given this reality, a new form of money was needed that would not be controlled by governments and central banks. No one would have thought that this would come true in 2009 with the launch of the new evolution of money and the rise of cryptocurrencies. 

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