WHAT IS CRYPTOCURRENCY?
Cryptocurrency is basically a virtual and decentralised form of currency based on the trust of its users and the ‘blockchain’ technology. It’s simply a transfer of digital assets.
Blockchain was a technology introduced with bitcoin invented by a man named ‘Satoshi Nakamoto’ who is yet to be identified and anonymous to this day. Satoshi’s invention, powers bitcoin and all other crypto currencies like ethereum, ripple, litecoin and cardano.
Crypto was brought in with the idea of replacing centralised currencies that are based on the trust of governments that claim the currency holds value. Those that created these currencies had a vision of creating an alternative to the centralised architecture of money controlled by banks and governments around the world.
In 2010, a bitcoin was worth nearly 6 cents, In 2017, a bitcoin was worth $17-19,000 and today as of the 5th of June 2021, a bitcoin is worth nearly $36,000
Not to say bitcoin hasn’t had it's bad days, In January 2018, due to all the uncertainty surrounding cryptocurrencies and rumours that the government may shut them down, the price of Bitcoin fell by about 65 percent during the month from 6 January to 6 February 2018. A bitcoin then was worth only about $8000.
WHAT IS ‘BLOCKCHAIN’ AND HOW DOES CRYPTO WORK?
A blockchain is simply a ledger of transactions, of which copies are distributed among all the computers on the network powering the currency.
Those that distribute these ledgers are called ‘miners’, they help by maintaining the chain and crunching numbers on a ledger, they are rewarded with bitcoin as compensation for dedicating their computing power to mining.
Crypto, has value since people believe it has value, just like gold that holds value because people believe it holds value.
A ledger contains all transactions made using crypto and there are hundreds of thousands of copies of each ledger. This makes it harder for someone to conduct fraudulent transactions, any tampering with a single or few ledgers would be identified and flagged as all the other ledgers would prove that a transaction never took place. Any fraudulent transactions using crypto would require each and every ledger on the network to be tampered with which is quite simply- impossible.
WHY CRYPTO?
I have listed out some of the reasons due to which many people feel the future is open traceable transactions. ⬇️
Its decentralised - every ledger (transaction) is public and can be accessed by anyone on the network.
No more banks.
No spending limits.
No transaction fees or interest (with most cryptocurrencies)
Quick and secure international transactions.
THE DOWNSIDES OF CRYPTO
Well, the biggest downside of any cryptocurrency is that it is very volatile and cannot really be predicted, one day a news article on them comes out it booms, the next day Elon tweets -
it drops again.
other downsides include:
high amounts of energy and computing power, result in the usage of large amounts of electricity .
very few stores online accept crypto, big names, such as Tesla and Microsoft have been very hesitant regarding accepting crypto.
We are currently still in the early days of crypto and the blockchain technology. Knowing if blockchain will become big and crypto will moon is still impossible. Thus, investing in crypto is still a gamble.
(p.s.- this article is in no way intended to be financial advice)
🔗 The Weekly Link-Up
Links to things I’ve enjoyed this week and think you might enjoy too:
💡If you liked this article, you might like this one too: DOES LUCK MATTER?
💬 Let me know your thoughts and if you enjoyed the article, please drop a ❤️!
This article is perfect for individuals(like me) who have no idea what crypto really is and it covers all bases regarding this controversial medium of money.