27/11/2019

What exactly are cryptocurrencies? Find out in Marcelo Viana's column.

Imagem: Michael Wensh/ Domínio Público

Reproduction of Marcelo Viana's column in Folha de S.Paulo.

As soon as the development of agriculture and technology allowed for the production of surpluses, human societies began to barter goods, exchanging what they had in excess for what they lacked.

Initially we used direct exchange, but this is very inefficient: most of the time when two parties meet, what one has to offer is of no interest to the other. To solve this problem, we invented one of our most influential and strange fictions: money.

Money can take many different forms around the world: shells, seeds, salt (where do you think the word "salary" comes from?), metal plates, pieces of paper, even digital bits.

Throughout history, it was believed that coins were worth the metal they were made of and, later, that paper money had to be backed by gold or silver reserves so that anyone could exchange their notes for the equivalent value in metal whenever they wished. This illusion evaporated at the beginning of the 20th century: money doesn't need to have intrinsic value.

But it is absolutely necessary that it be reliable: what gives money value is the users' confidence that they can convert it into valuable goods whenever they want. That is why counterfeiting and other attacks on the integrity of the currency are punished so severely, and why the functioning of money has always required the existence of issuing and regulatory authorities (central banks). This is changing, and the financial world will never be the same again.

In November 2008, an article was published online in which a mysterious person or entity, calling itself Satoshi Nakamoto, presented a new type of currency with revolutionary characteristics: Bitcoin. Bitcoin is an example of cryptocurrency because it has no physical support; it consists merely of information stored in the cloud. Many others have since emerged and quickly become popular.

To read the full text, visit the newspaper's website or check the print version .