Crypto-what?! The first time you hear the term it sounds like Kryptonite. Basically, cryptocurrency is an encrypted, decentralized digital currency transferred between peers and confirmed in a public ledger via a process known as mining. We know that’s a mouthful…don’t worry. We’ll start off with a brief summary and then break it down piece by piece:
An easier way to wrap your mind around a new concept is to compare it with something you’re familiar with. So think of cryptocurrency the equivalent of PayPal or a Debit Card. The difference in this situation is the numbers you see on the screen represent a specific cryptocurrency instead of fiat currency (e.g. USD, EUR, RUB, CNY.) With both PayPal and cryptocurrency you’re not dealing with cash anymore. In both cases, there is a system that issues currency and records transactions and balances. This lets you send and receive currency electronically.
Online platforms are used to manage accounts and move balances just like banks. The main difference between cryptocurrency and bank credit is that instead of banks and governments issuing the currency and keeping ledgers, an algorithm does.
Blockchain and cryptography are the two concepts that make up a ‘public ledger’. This means cryptocurrency is a digital currency, where transactions are recorded on a public digital ledger called a blockchain, and each process is secured by cryptography.
What is cryptocurrency? Despite the many illustrations of coins we see, cryptocurrency only exists on computers — that’s what makes it digital. It is considered to be open and fair because it is transferred between peers using a software called cryptocurrency wallets (e.g. Coinbase). This means there is no middleman that can attach any additional fees when transfers are made, like banks often do. These transactions are kept track of on a blockchain. Transaction data and the ledger are encrypted using cryptography, hence the “crypto” part.
What does decentralized mean? Cryptocurrency is referred to as decentralized because it is controlled by users and computer algorithms and not a central government. (This is why it’s considered the new-generation, most democratic currency.) The blockchain is hosted on several computers across the world. Just as fiat currencies are traded on the stock market,
cryptocurrencies are traded on online cryptocurrency exchanges, like stock exchanges.
How does cryptocurrency work? Transactions are sent between cryptocurrency wallets. If you want to create a transaction, you simply use the wallet to transfer balances from one account (i.e. public address) to another, just like online banking. To transfer funds, you would need to know a password (i.e. private key) associated with the account. After the transaction is made, it is then published to the cryptocurrency network and queued up to be added to the blockchain.
How can you obtain or trade cryptocurrency? Obtaining cryptocurrency is done basically the same way other types of currencies are. You can exchange goods and services for cryptocurrency or you can trade other money types for cryptocurrencies. Since there is more than one type of cryptocurrency, you also have the option of exchanging one form of cryptocurrency for others.
Though it may be a lot to process, the crypto-world has many benefits. With its public accountability and transparency, it’s (literally) no secret why many businesses and products now operate using cryptocurrency. Founded on blockchain technology, all.me is the first digital network to feature a social media platform with its own cryptocurrency. Users have all the comforts of social media, plus the added advantage of earning up to 50% of advertising revenue, if they choose to activate their promotional account. With their crypto-earnings, known on the platform as ME, users can shop online on all.me’s marketplace.
Hopefully this quick guide gives you a clearer picture of the latest currency form and its future potential. We’re excited to be at the cutting edge of cryptocurrency and we’ll be sure to keep you updated with more cool developments. Best of luck!
Written by Alice Ananian
