UNDERSTANDING THE CRYPTO JARGON
Cryptocurrencies are fast becoming a household name for Gen Zs and Millenials. Gen Xs and Baby boomers are also trying to adapt to this form of change in the financial system. With billions of dollars worth in crypto traded and realized daily from crypto transactions, cryptocurrencies have proven to be a great source of income for a large mass of people. They have also proven to be a great tool for decentralization and the tokenization of assets.
But what exactly are cryptocurrencies, how did they revolutionize, and what difference has it from fiat?
A cryptocurrency is a digital currency that can be used as a means of exchange; buying, selling, and making payments between two or more people just like fiat currency (legal tender declared by the government of a country, eg: the Nigerian Naira, and the US Dollars, etc).
History of Crypto
The journey to the digital economy began way back in 2009 with the creation of bitcoin by the mysterious Satoshi Nakamoto who remains unknown until now. Funny how the creator/founder of a technological innovation of such magnitude has remained anonymous.
Designed to work as a means of exchange, the use of crypto began with the creation of bitcoin — a decentralized digital currency configured to work on a peer-to-peer network. Its major selling point is its decentralized feature that allows you to perform financial transactions without the need for an authorized third party. Cryptocurrencies are fast becoming a means of payment for both local and international transactions.
Cryptocurrencies are built on a blockchain, a distributed ledger for recording transactions. These records/data are secured on the blockchain by a method of encryption called cryptography, thereby preventing them from malicious third parties.
The use of cryptocurrencies allowed for the tokenization and acquisition of fractional parts of specific crypto assets.
To further understand this concept, let’s take a look at the difference between cryptocurrency and fiat.
Difference between crypto and fiat
While the current currency regarded as legal tender in a particular country is referred to as fiat, cryptocurrencies are the digital form of money but with a great difference.
Take a look back at the last time you tried making a huge transaction to a relative or a friend overseas, you must have experienced one of these: a decline in transactions due to a technical issue posed by the bank’s server, high and exorbitant transaction fees, the lengthy period before remittance is made, transfer limit and many other issues that there might be.
However, with crypto, there are no limits to the number or amount of crypto assets to be traded or transacted daily. Now assets can be transferred from one country to another by different people within split seconds, without any of the challenges stated above, the hassle of paperwork, and most importantly, the need for a trusted third party.
Guess what? You have access to your funds 24/7!
Since the creation of bitcoin, there has also been the creation of other cryptocurrencies such as Ethereum (Eth), Solona (Sol), and Cardano (Ada) with each of these projects having its different use cases and utility. There are currently over nine thousand cryptocurrencies created on the blockchain with each of them having its own utility and value.
Crypto Moves
However, while some governments like Nigeria and China banned crypto transactions, countries like El-Salvador and the Central African Republic have adopted cryptocurrency as legal tenders in 2021 and 2022 respectively. Microsoft, Paypal, Shopify, and Tesla also accept crypto as a means of payment for their products and services. Of recent, Google announced its acceptance of crypto for the payment of its cloud services.
Malta, a country located in the Southern part of Europe, is named the Blockchain Island because of its support for innovation in the blockchain and crypto space. Due to harsh government policies faced by some crypto companies, exchanges such as Binance, and BitBay moved their headquarters to Malta.
Where can crypto be bought?
Cryptocurrencies can be bought and sold on crypto exchanges. Examples of such exchanges are Decentralized Exchanges (DEX) like Uniswap, and Sushiswap and Centralized Exchanges (CEX) such as Binance, WhiteBIT, Kucoin, Huobi Global, etc.
There are also software wallets such as Exodus and hardware wallets such as Ledger where your crypto can be stored.
Demerits of Crypto?
Although we have talked about crypto and the solutions it profers to us, we know that anything with an advantage surely has a disadvantage.
What are the downsides to crypto?
Unlike banks where transactions can be tracked and recouped when it is sent to the wrong account number, crypto can’t be tracked or recouped when sent to the wrong address.
The crypto market is highly volatile and risky. Investing in crypto should be done with due diligence hence the phrase “Do Your Own Research — DYOR”.
Crypto exchanges and blockchains generally are prone to attacks by malicious people. Once attacks like this happen, a lot of funds are always lost.
Cryptocurrencies are not regulated by anyone, there are therefore no rules or laws to protect your funds or business. But then, what is the need to regulate cryptocurrencies when it promotes decentralized finance (matter for another day)?
Is crypto safe?
Cryptocurrencies have been classified as highly volatile assets. Unlike the stock market which is peculiar to a particular country or region, the crypto market is global which makes it accessible to anyone with an internet connection.
Therefore, it should only be traded or invested in with caution.
CONCLUSION
Cryptocurrency holds a great future for the world’s economy and is greatly revolutionizing finance. Anyone with an internet connection can access crypto without hassle just by fulfilling specific conditions.
Have you invested in crypto before? Tell us what your experiences have been so far. It’ll be nice to hear from you.
PS: This content is exclusively for educational purposes. Solely to help you demystify the jargon of the web 3 world. Do well to contact your financial adviser if you wish to invest in cryptocurrency.
Want to discuss or understand more about this technology, connect with me:
Linkedin: Gloria Echendu
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My name is Global_Gloria and I remain your Favourite Web 3 Advocate.
Thanks for reading.
