ABC of Cryptocurrency — A Beginner’s Guide to Digital Currency
Why is everyone talking about Bitcoin, Ethereum and BNB? What’s in all this memecoin? How do I learn about Crypto?. All these questions and more will be answered. Here is everything you need to know about cryptocurrency.
Cryptocurrency is like regular currency(but digital) which is designed to work as a medium of exchange or a store of value. It uses cryptography to secure and verify transactions and control the creation of new units of any digital currency.
Cryptocurrencies are distinguished from fiat currencies like the US dollar or the Nigeria Naira because any central authority does not issue them, making them potentially not to be affected by government intervention or manipulation.
Cryptocurrency does not exist in physical form (like paper money) but it is live on the internet and is typically not issued by a Central Bank or government and of which its value is decided by market forces created by those seeking to purchase or sell them.
Cryptocurrencies typically use decentralized control as opposed to a central bank currency. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is considered centralized. When created with decentralized control, each cryptocurrency works through what is called distributed ledger technology. Which is typically a blockchain, that serves as a public financial transaction database.
Bitcoin, which was first released in 2009, is the first decentralized cryptocurrency. However, since the release of bitcoin, many other cryptocurrencies have been created with different uses and purposes.
Why are cryptocurrencies so popular?
- People see cryptocurrencies such as bitcoin as the currency of the future and are running to buy them now, presumably before they become more valuable.
- Some people like the fact that cryptocurrency removes central banks from managing the money supply since over time these banks tend to reduce the value of money via inflation.
- Other people like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized system and can be more secure than traditional payment systems.
Types of cryptocurrency
There are generally Cryptocurrency(Bitcoin and Altcoins) and Tokens.
- Altcoin - refers to any blockchain-based cryptocurrency that isn’t Bitcoin. The term “altcoin” was coined as a shorthand for “alternative to Bitcoin”. Examples are Ethereum and Litecoin.
- Stablecoins - a coin that gives users a way to sell into an asset carrying the same value as a national currency, but can still be transacted and stored in a crypto-esque fashion within the ecosystem.
- Nonfungible tokens, or NFTs, are yet another type of cryptocurrency, denoting that it is a one of a kind asset and cannot be replaced.
- Tokens are built on an existing blockchain but are considered to be programmable assets that enable the formulation and execution of unique smart contracts.
How do I get into cryptocurrency?
The easiest way to start buying and holding cryptocurrency would be with an exchange. There are several popular ones and you can use them right on your smartphone. This allows holders to buy, sell, and store their crypto on their phones or computers.
All you need is to download the app, create an account, enter your info and connect to a bank account or through a peer-to-peer transaction, then you can transfer real money to buy cryptocurrencies such as bitcoin or Ethereum. Any amount of money is enough to get started because you can buy a variation of a coin, it doesn’t need to be a whole coin.
Good examples of Crypto Exchange are:
- Binance
- FTX
- Bundle(Nigeria)
- Trustwallet
- Robinhood
- Coinbase etc.
Should you buy cryptocurrency?
Cryptocurrency is a digital asset that is paving the way in the internet world and you won’t want to come late to the party.
Cryptocurrency is an incredibly speculative and volatile buy. The advice is only to buy with an amount that you can lose.
N.B: If you are starting out, it is advisable to take the advice of a financial expert or crypto expert.
What does the future look like?
Cryptocurrency has come a long way over the last decade, advancing at a lightspeed pace. Value can be stored, transferred and spent in different ways through various assets and solutions, while Defi has pioneered the way for new borrowing and lending avenues.
The future of cryptocurrency and its associated technology appears bright, judging by the growth that has been seen since 2009 when Bitcoin came into existence.
