Cryptocurrency: What Is It, Brief History, Risks, And Benefits
Cryptocurrency is money that exists in digital or virtual form, it is often referred to as Crypto, meaning it secures transactions with Cryptography. Cryptography allows users to safely transact with someone without knowing anything about them.
Cryptocurrencies are decentralized payment systems, this means they operate without a central authority or regulatory body. This is an autonomous currency that uses a decentralized technology, known as Blockchain technology, to disperse units and record transactions information.
A Blockchain is a decentralized ledger system that records Cryptocurrency transactions and is distributed across a network of computer systems. The Blockchain proctects digital currency from government influence. It employs peer-to-peer currency system, which is non-limiting and leaves power in the hands of the users.
Unlike regular fiat currency like the European Euro or the US Dollar, Cryptocurrencies exist only in the digital space. This makes it easier to transact with. This currency eliminates the need for banks and other intermediaries. You can store your crypto in your personal wallet, giving you complete control over your money.
Encryption is the basis of Cryptocurrency. Several encryptions protects Cryptocurrency, such as public-private keys pair. These encryptions secure transactions and safeguard Cryptocurrencies stored in your wallets. You can buy Cryptocurrency from Cryptocurrency exchanges or mine them on mining platforms.
However Cryptocurrencies are yet to be fully incorporated into the commercial Sector; only few companies would accept Cryptocurrency as mode of payment. The most widely accepted Cryptocurrency is Bitcoin. It is the first Cryptocurrency and is currently the most recognized one in the world. Regardless Bitcoin has not been fully accepted for commercial transactions.
However, Cryptocurrencies can be traded to make profit and, in some cases used for cross-border transfers.
History
The concept of Cryptocurrency was first introduced in the late 1980s. The goal was to create a currency that could be sent anonymously without the use of centralized entities or intermediaries. David Chaum an American Cryptographer in 1995 created digicash, an untraceable Cryptographic digital currency.
Digicash was the earliest form of Cryptographic digital transactions. To send this currency to a receiver, the user software must first withdraw money from a bank and required certain encrypted keys.
A little later in 1998, Nick Szabo invented Bit Gold, which is frequently reffer to as the actual predecessor of Bitcoin. Bit Gold required users to solve Cryptographic puzzles and rewards those who succeeded with a prize. However, the puzzles consume large amount of computer power. Bitcoin evolved as a combination of these two concepts.
The Origin Of Bitcoin
It's appeared Szabo wasn't able to fix the problem of double-spending without using a regulatory body. The true history of Bitcoin and other Cryptocurrencies began a decade later, on October 31, 2008, when an anonymous person or group of persons released a white paper title Bitcoin -- A Peer To Peer Electronic Cash System.
This White paper was published by a pseudonym Satoshi Nakamoto, and to date no one knows the identity of this entity. The anonymity of its founder didn't stop the growth of Bitcoin. Bitcoin's circulating white paper will go on to begin history for Bitcoin.
The first block ever mined by Satoshi on January 3, 2009 was named the Genesis Block, which was a representation of the first 50 blocks of Bitcoin. A headline from the New York Times was used in the first block to relate to the economic conditions that led to the development of Blockchain technology.
As a new Currency, Bitcoin had no value in the early days. The value of a single unit of Bitcoin was worth less than 14 cents, even after it began trading in 2010. Then on May 22, 2010, Bitcoin was used to buy a pizza. This day is now celebrated as "Bitcoin Pizza Day" in remembrance of the day Bitcoin was used to buy a physical item.
Later Movement that same year, Bitcoin had risen to 36 cents. And today it is worth over $30,000. Undoubtedly, Bitcoin's growth over the years has inspired creation of several other Cryptocurrencies, most notably Ethereum.
The Risk Involvement of Cryptocurrency
Highly Volatile
Perhaps the most dangerous cryptocurrencies' feature is its ability to surge or plummet rapidly and unpredictable. Cryptocurrencies are highly susceptible to sudden changes in due to speculations and sentiments. It is a common phenomenon for Cryptocurrencies to either rise astronomically or drop rapidly in the shortest time.
Hacking
Storing money in a digital space has its advantages and disadvantages. The disadvantage of keeping money online is that it makes money liable to cyber attacks. The control Cryptocurrencies gives also makes you responsible for its protection.
Taxes
Because Cryptocurrency is such a new technology, government are looking into ways to update existing rules and tax guidelines to cover various crypto activities. As a result there is a high chance that the legal area shift unexpectedly.
Therefore, it is essential that you stay abreast with the specific tax laws for your jurisdiction, as well as stay informed of any impending modifications as they are change with time.
Market Risk
Because Cryptocurrencies trades only on demand, the market risks involved are unique. The limited supply of the currency may cause liquidity issues. Low ownership can also render it vulnerable to market influence.
Benefits Of Cryptocurrency
Privacy
Cryptocurrency transactions do not require you to get out sensitive personal information. This ensures your identity is safe from third parties such as banks and payment systems. This risk of your personal data or identity being stolen is now drastically reduced because no personal information is shared on the internet.
Autonomy
Cryptocurrencies eliminate the need for a third party this giving you complete autonomy over your investment. You are allowed to send, recieve, and trade crypto without worrying about government's interference.
Security
Most Cryptocurrencies are protected by Blockchain technology. The Blockchain is consistently examined and validated by massive computer power, which means that your cryptocurrencies are constantly secured.
Speed
The lack of third-party interference speeds up the cryptocurrency transfer process, unlike conventional money transactions that depends on intermediaries like banks.
Portability
You can access your cryptocurrencies from anywhere in the world because they are not tied down by financial institutions. This allows users to seamlessly transact from anywhere in the world.
We present to you Crypto, a place of limitless wealth possibilities and opportunities. Stay tuned for more Articles from us.
Odife Somkene
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