The cryptocurrency introduction you wish you had😎
Cryptocurrency, blockchain, bitcoin, wallet, NFT🤯….all these terms have become very common. It feels like a financial revolution and the future and game of money are changing before our eyes. In this article, I explained the basic concepts of cryptocurrency. The aim is to help you understand and get familiar with these terms when next you hear or see someone talk about them.
Glory Praise Emmanuel
Cryptocurrency, blockchain, bitcoin, wallet, NFT🤯….all these terms have become very common. It feels like a financial revolution and the future and game of money are changing before our eyes.
In this article, I explained the basic concepts of cryptocurrency. The aim is to help you understand and get familiar with these terms when next you hear or see someone talk about them.
Note: I am not an expert, I am just learning and sharing what I have learned. Do well to research to learn more about this subject matter.
What is Cryptocurrency?
Cryptocurrency is a digital and virtual currency, that utilizes blockchain technology and cryptography and is decentralized.
Calm down, I would explain😁
A virtual currency is just an agreed way of exchanging over the Internet.
It has some benefits which include;
- It doesn’t have a transaction limit
- There is little to no transaction cost
- International transactions are faster
Note: There is a limit to how much cryptocurrency can be produced and distributed, for instance, for Bitcoin, there is a market cap of 21 million units and for Ethereum, it is 100 million units.
What is Blockchain?
A blockchain is a public digital ledger of transactions that is hack-proof and difficult to manipulate. Individuals can transact securely with one another without the need for an intermediary like a government, bank, or other third parties.
Think of this as one giant large spreadsheet, this spreadsheet is called a ledger. And in this spreadsheet, we have the record of every crypto transaction that has been ever carried out since January 2009 when Bitcoin was first invented.
A blockchain is encrypted and it uses public and private keys to maintain a sort of virtual security. A blockchain allows a person to safely send money to another person without going through a bank or financial services provider.
What is Cryptography?
Cryptography is used to link the expanding list of records, known as blocks. Each transaction is independently validated, time-stamped, and contributed to a growing chain of data using peer-to-peer computer networks. The info can’t be changed once it’s been recorded.
Cryptography uses a one-way function called hash function which encrypts everything put through it and this encryption can’t be reversed.
Concept of Decentralization?
Another interesting thing about cryptocurrency is that it is decentralized, which means there is no central person or company in charge, which means everyone in the world can have a copy of its spreadsheet if they want, which makes it hard to influence or steal from.
What is Bitcoin?
Bitcoin is a cryptocurrency, there are so many others but Bitcoin is the first and most popular.
Bitcoin was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. The currency began to be used in 2009 when its implementation was released as open-source software.
One of the main strong points of crypto is to eliminate charges and delays but you need to use an exchange to convert your fiat money to cryptocurrency.
What is Fiat money?
Fiat Money is a kind of currency, issued by the government and regulated by a central authority such as a central bank. It is just regular money like US Dollar, Pound, Euro, and Naira.
What is a Crypto Exchange?
Crypto exchanges connect buyers to sellers. It is a digital marketplace where you can buy and sell cryptocurrency. And some exchanges are used by people to store their cryptocurrency.
What is a Crypto Wallet?
A wallet where you can keep your cryptocurrency. Digital wallets are available on several exchanges. Wallets can be either hot (internet, software-based) or cold (hardware-based, offline, usually on a device).
What is the difference between a Coin and a Token?
A coin is any cryptocurrency that operates on its own blockchain, acts as money, and can be mined. Examples of coins are Bitcoin, Ethereum, etc. Unlike coins, tokens do not have their blockchain. Instead, they operate on other crypto coins’ blockchains. Some of the most commonly seen tokens on Ethereum include BAT, BNT, Tether, and various stable coins like the USDC.
What are Altcoins?
Altcoins are alternative coins to Bitcoin. Altcoins range from the second-most popular coin, Ethereum, to thousands of coins with extremely low market value.
What is a shitcoin?😂
A shitcoin is a cryptocurrency or digital currency with little to no value and no clear purpose or use case.
What is a whitepaper?
A whitepaper is a vital document created by the creators of a crypto project that contains all of the project’s information; it sheds light on two major components of the project: its aim and the technology that drives it. It includes details on the project’s previous performance as well as other information. A whitepaper can help a cryptocurrency stand out from the crowd.
Going to the moon?🌚
Going to the moon or mooning(I am sure you have heard this a lot if you have crypto traders as friends😂) is a phrase used when a cryptocurrency’s price and volume are likely to skyrocket, taking it off the charts. Simply put, it is just used to describe when crypto gets more valuable than it was first purchase making the owner richer if he/she sells it off.
What are NFTs?
NFT(non-fungible token) is basically having digital ownership over a digital asset.
NFTs use the same blockchain technology that powers cryptocurrencies, but they’re not a currency.
NFTs are simply digital versions of tangible collector’s items. As a result, rather than receiving an actual oil painting to put on the wall, the customer receives a digital file.
NFTs can only have one owner at a time. Because NFTs include unique data, they can be used to hold specific information by the owner or author. Their owners obtain exclusive rights to the property.
While there are so many good things about cryptocurrency, the downside is that it can be used for illegal activities which can’t be traced because you are kind of anonymous on the network. But hey😒, the internet can be a good or bad tool depending on how it is used, so is any other thing including Cryptocurrency.
Cryptocurrency could become accepted globally as a means of exchange in the future(it is already an accepted means of exchange in some countries), just saying🤷♀️. So ensure you pay attention to this new trend(it’s not new, but you get what I mean😉).
Finally, if you ever decide to start investing in crypto, ensure you put in only what you can comfortably lose 100% because it is still a high-risk speculative investment. Do as much research as you can before you take any step.
I hope you found this article helpful or at least you enjoyed reading this🤭
Till I come your way again,
Glory Praise Emmanuel
Glory Praise Emmanuel is a frontend web developer based in Nigeria. She is passionate about providing solutions with technology and making the world a better place.