CRYPTOCURRENCY

Welcome

CRYPTO CURRENCY

Today, we’ll be discussing, briefly, cryptocurrency. We’ll try to understand in a layman’s terms the basic details that encapsulates cryptocurrency. What is cryptocurrency?

Cryptocurrency is digital or virtual money. That means there’s no physical coin or bill — it’s all online. You can transfer cryptocurrency to someone online without a go-between, like a bank. Bitcoin and Ether are well-known cryptocurrencies, but new cryptocurrencies continue to be created(Consumer Information, 2018).

In simple, basic language that’s the definition of cryptocurrency. So as you can see it isn’t rocket science. Though, there are aspects to it they are complicated (we’ll get to that).

Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.(NerdWallet, 2021).

The blockchain is a complex procedure on it’s own and I enjoin you to conduct your own personal research. It is the heart of the cryptocurrency revolution. Every transaction that involves any cryptocurrency is done through the blockchain technology.

Cryptocurrency is here to stay and as such I highly encourage everyone to get on board. The first major cryptocurrency is bitcoin and as at the time of this publication, one bitcoin is worth a staggering N22, 000,000 million(higher than this amount). This is so mind boggling.

What are the advantages and disadvantages of the cryptocurrency?

ADVANTAGES

Protection from inflation: cryptocurrency is virtually unaffected by inflation. For example, there will be only 21 million bitcoins in circulation. It has been programmed that way by its creator and as such an individual or organization can’t manipulate it’s numbers for their benefits

Self governed and self managed: cryptocurrency is self governed. No major institution or governments has control over it.

Secure and Private: it is secure and private. You are given a private key for your wallet for any transactions. Therefore, making you the sole proprietor of your transactions.

Decentralized: cryptocurrency is decentralized i.e. it isn’t under the control of a bank or banks, governments or financial institutions.

Currency exchanges can easily be done: using ones cryptocurrency wallet, one can convert his or her digital coins to any fiat or physical currency he or she wants. One can even exchange ones digital coins to another type of virtual coins.

Cost effective mode if transactions: the use and payment of transaction fees to third party apps like paypal or paystack is eliminated. The buyer is dealing directly with his seller or client and vice versa.

It is a fast way to transfer funds.

DISADVANTAGES

It can be used for illegal transactions

Data losses can cause financial losses: if the user looses his or her password, his digital coins are irretrievable forever. All of his coins will be lost.

Decentralized but still operated by some organizations: even though cryptocurrency is decentralized, some major organizations and powerful persons have some influence and operational power over it. E.g the institutions who generate or mine the digital coins etc.

Some coins are not available in other fiat(physical) currency.