CRYPTOCURRENCY
In this article, we would be discussing the following:
= What Cryptocurrency is all about
= Brief history of cryptocurrency
= Types of cryptocurrency
= Benefits of cryptocurrency
= How cryptocurrency works
=Difference between Traditional currency and Cryptocurrency
=How to buy Cryptocurrency
= How to store Cryptocurrency.
Let’s deal with the itemized above and in the next article about cryptocurrency we discuss further crypto contents as this course is a very complex one.
What is Cryptocurrency? It is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. It is a coded string of data representing a currency unit.
Cryptocurrency is decentralized, which is to say, it not controlled by any government, financial institution or individual. Transactions are recorded on a public digital ledger called a blockchain, which is transparent and tamper-proof.
*Brief History Of Cryptocurrency*
The most popular cryptocurrency is Bitcoin, which was created in 2009. Since then, thousands of other crypto currencies have been created with different functions, features, and uses. Some other well-known cryptocurrencies include Ethereum, Litecoin and Ripple.
Cryptocurrencies can be used for a variety of purposes, including buying goods and services, investing and trading on cryptocurrency exchanges. They can be stored in digital wallets, which are secured with private keys that give the owners access to their funds.
One of the unique features of cryptocurrencies is their limited supply. For example, Bitcoin has a maximum supply of 21 million coins, with 18.7 million already in circulation. This limited supply and the decentralized nature of cryptocurrencies have led them to being seen as a hedge against inflation and a store of value.
However, cryptocurrencies are also highly volatile, prices often fluctuate rapidly and unpredictably.
The use and regulation of cryptocurrencies are still evolving, many governments and financial institutions being cautious about embracing them fully. However, the growing popularity and technological advancements in the industry suggest that they are here to stay and will continue to play an important role in the future of finance.
*How Does Cryptocurrency Work?*
A digital currency is hard to fake due to its security features. The basic idea behind cryptocurrency is that it is a decentralized, which like I stated earlier, is free from the control of the the financial institutions and the government. uses encryption techniques to ensure well secured transactions and to control the creation of new units.
In order to use cryptocurrency, you need to have a digital wallet, which is a software or app program that stores your private keys used to access your funds and public keys used for others to send you funds.
When you want to transfer cryptocurrency to someone else, you create a transaction that is broadcasted to the entire network. Other users of the network confirm the transaction and add it to the blockchain which is a public ledger of all transactions on the network.
The encryption used in cryptocurrency help to ensure that transactions are secure and that new units are only created according to a set schedule and rules. In some cases, this involves complex mathematical problems that must be solved by network users in order to verify transactions or to create new units of the currency.
*Benefits Of Digital currency*
1. With digital currency, the exchange cost is low compared to traditional payment methods. This is because cryptocurrency transactions do not require intermediaries or middlemen.
2. Decentralization: Cryptocurrency is decentralized, which means there’s no central authority governing it. It allows users to transact and exchange funds without the need for intermediaries such as financial establishments, governments, or any third-party service providers.
3. Transparency: Blockchain technology which is used to fabricate and build cryptocurrencies is a transparent system. It allows users to track transactions and ensure that there are no fraudulent or illegal activities in the system.
4. Security: Cryptocurrency transactions are very secured and irreversible, which means that once a transaction is made, it cannot be reversed. A user’s private keys, which are used to access their account and transact with the network, are kept secure through encryption and other security measures.
5. Privacy: Cryptocurrency users can maintain their anonymity while transacting on the network. Transactions are verified using public and private keys, ensuring that users remain anonymous if you so wish.
6. Accessibility: Cryptocurrencies are open and accessible to anyone with an internet connection, regardless of their geographical location or financial status.
7. Investment opportunities: Cryptocurrencies provide an opportunity for investors to invest in a new and emerging market that has significant potential for growth.
8. Faster transaction times: Cryptocurrencies allow for faster transaction times compared to traditional payment methods. Transactions can be completed within seconds or minutes, rather than days or weeks.
*Types Of Cryptocurrencies*
There are hundreds or thousands of cryptocurrencies but let me enlist only ten as of course you know I can’t all as they are too numerous.
In the brackets are the acronym of each crypto.
1. Bitcoin (BTC): The first and most popular cryptocurrency and it was introduced in the year 2009.
2. Ethereum (ETH): A decentralized platform that enables developers to build and deploy decentralized applications (dApps) on the blockchain.
3. Ripple or Swell (XRP): A digital currency designed for worldwide payments and money moves.
4. Bitcoin Cash (BCH): Is a branch of the original Bitcoin cryptocurrency that was fabricated in 2017 to address concerns about slow transaction times and high charges.
5. Stellar or Heavenly (XLM): Created as a branch of the Ripple protocol, Stellar focuses on providing low-cost and fast cross-border payments.
6. Litecoin (LTC): A cryptocurrency that was created in 2011 as a faster and more efficient alternative to Bitcoin.
7. Cardano (ADA): A decentralized platform that aims to providing a safer and sustainable framework for cryptocurrency transactions.
8. Tether (USDT): A stablecoin that is fixed to the US dollar, providing stability for users who want to avoid volatility or unpredictability in the digital money market.
9. Binance Coin (BNB): A cryptocurrency that is used to pay for fees on the Binance exchange which is one of the largest digital money exchanges in the world. In crypto, Binance is a big name and it remains my favorite.
10. Chainlink (LINK): A decentralized blockchain platform that offers secure integration of smart contracts or agreement with external information sources.
Each of the above cryptocurrencies has kind of wallet that is compatible with it and not just any wallet can be used with all.
*How To Buy Cryptocurrency*
You can buy cryptos through the major following ways:
1. Choose a reputable cryptocurrency exchange that allows you to buy or trade such as Coinbase, Binance and Kraken. These three are more popular and reliable.
2. Set up an account on the exchange and provide the necessary personal information such as name, address and means of identification.
3. Buy crypto: Once your account is set up, you can purchase cryptocurrency with a bank transfer, debit, or credit card. Make sure to choose the currency you want to purchase and the amount you want to spend to purchasing it and you are done, it as simple as that.
*How To Store Crypto*
1. After buying cryptocurrency, you need to store it in a wallet secured by a private key. There are two types of wallets known as hot and cold wallets. Hot wallets are connected to the internet and are more convenient but less secure. Cold wallets are offline and more secure.
2. If you store your cryptocurrency in a wallet that is not connected to the exchange, you need to transfer it to the exchange to trade or sell it at your own times. To do this, go to your wallet, select the cryptocurrency you want to transfer, and enter the exchange’s wallet address. In Binance, you can even exchange, store and trade your crypto within the platform.
*Difference Between Traditional Currency And Cryptocurrency*
Here are the difference between traditional currency or cash and digital money known as cryptocurrency.
1. Cash is centralized as it is being issued, backed, controlled and maintained by the government while crypto is decentralized.
2. Cash saved in the bank may reduce risk of being stolen or lost but cash printed can be faked while cryptocurrency can’t be faked and can only be store in two ways which is through self custody and through third party custody.
3. There are some government agencies that insures cash deposited in member banks against losses but in crypto, you bear your loss without replacement as there is no any organization that insures crypto for now.
4. In cash currency, there are clear regulations with traditional currency like serial numbers, water marks and others but in cryptocurrency there are no such established clear regulations around it.
5. Cash can be obtained or withdrawn from specific places such as bank branches or ATMs, but limitations may apply, such as bank closures during weekends or withdrawal restrictions and limits at ATMs. On the other hand, cryptocurrencies are solely digital, meaning you won’t physically hold or carry any digital money like bitcoin as you would to a dollar bill, naira or any other traditional currency of the world.
But blockchains operate continuously, including on weekends, holidays, and during the night. You can transact at any point in time and to your desired amount without restrictions.
There are several other differences between cash or traditional currency and digital money.
As I seek your permission to draw the curtain here, we shall discussing further on subsequent articles on cryptocurrency. Should there be any interest in paid training, do not hesitate to indicate in the comment section to be added to a Whatsapp group.