If you’re that lost person who’s just like me trying to figure out what on earth this new virtual currency norm means I don’t blame you. It took me close to 500GB worth of data consumption for YouTube/Google, almost losing $250-$500 and close to a year of research to get almost ¼ on what it is and the reality behind it. Here is a brief idea of what it is and how it works.
What is Crypto?
It is a collection of binary data which is designed to work as a medium of exchange. The process is to store an Individual coin ownership record is stored in a ledger which is a computerized database using cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership. Cryptocurrencies are generally fiat currencies, as they are not backed by or convertible into a commodity.
Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency. When a cryptocurrency is mined or created before issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, also known as the blockchain.
Bitcoin was one of the firstly created cryptocurrencies which were initially founded in 2009 by the founder claiming to be Satoshi Nakamoto.
History of CryptoCurrency
David Chaum, an American cryptographer, invented ecash, an anonymous cryptographic electronic money, in 1983. Later, in 1995, he put it into action with Digicash, an early form of cryptographic electronic payments that required user software to withdraw notes from a bank and designate specific encrypted keys before sending them to a recipient.
2009 – 2011
Satoshi Nakamoto, a supposedly pseudonymous developer, established the first decentralized cryptocurrency, bitcoin, in 2009, with a total supply of 21million bitcoins. In its proof-of-work scheme, it utilized SHA-256, a cryptographic hash algorithm. Namecoin was launched in April 2011 as an attempt to construct a decentralized DNS that would make internet censorship extremely difficult. Litecoin was launched shortly after, in October 2011. Scrypt was utilized as the hashing algorithm. Peercoin, another well-known cryptocurrency, employed a proof-of-work/proof-of-stake hybrid.
El Salvador became the first country to accept Bitcoin as legal tender in June 2021, after the Legislative Assembly voted 62–22 to approve a bill proposed by President Nayib Bukele to classify the cryptocurrency as such.
The all-time high of Bitcoin to date of writing was $68,521 on November 5th, 2021.
Future of CryptoCurrency
The future of cryptocurrency will keep on expanding there will be new types of currencies all along this stage of evolution around the world. There could also be possibly a stage where there will be no more paper currency, and everything controlled virtually. So adjusting our lifestyles to the flow is greatly appreciated by the tech industries as well as a new chapter for Financial services.
Already many massive tech giants like Tesla, Meta, Apple, and Microsoft, etc, are discovering new opportunities for the better of humankind.
Types of CryptoCurrencies
A few of the most popular cryptocurrencies are listed below.
Binance Coin (BNB)
USD Coin (USDC)
Shiba Inu (SHIB)
How does it work?
Briefly, the crypto market is quite like the stock market on the technical side although the difference is that there is nothing Physically ownable and it does not pay you a dividend.
The concept is the same you buy your preferred cryptocurrency at its lowest value and sell it at the best value in which you make a profit. Although the concept is that simple the challenging area is to determine when will the market crash or rise. It is really complex to determine the favor of the crypto market mainly because it’s virtual and it has to go through a serious number of calculations and experience to get It right, this is one of the main disadvantages of investing in Crypto because you never know you will lose your money.
There is another area to crypto other than investing which is mining. Cryptocurrency mining is having control of a ledger of all incoming and outgoing transactions around the world in a specific cryptocurrency. Many volunteers, governments, and professionals in the industry uses high-quality mining rigs to configure and help protect the ledger account of the transactions across the globe. In which the hashing algorithm of the specific currency gives a reward for protecting the network.
There are several large-scale mining facilities across the world mainly in cold countries and areas in which electricity costs are very low. Mining consumes a lot of power and energy, so the requirements of cold temperatures and low electricity costs are required to maintain profits.
What you can do with Crypto Currencies?
Across 8 billion People in the world and over 221million people already involved it’s a new norm that will gradually rise. The trust, guidance & faith of the people is a point strongly addressed because of how the world-leading entrepreneurs and personalities get involved in this industry.
For example, Elon Musk the CEO & founder of Tesla, SpaceX bought an estimate of 42,902 bitcoins which is in today’s value equivalent to $2.8 Billion (USD).
Chamath Palihapitiya founder of Social Capital is also a great disciple of cryptocurrencies and the trust and positive feedback given by these great individuals gives hope to the world that this stage of financial services is important and will take over the world.
Companies in the present are accepting payments through crypto in which they will hardly convert to fiat currencies because the value of it will rise.
It also can be a way of being self-employed trading Crypto and making an income for a lifetime.
It also can be used to buy virtual art and objects also known as NFT (Non-Fungible Token)
This can be from digital art, virtual real estate, vintage items, and much more.
The main cryptocurrency used for a NFT is Ethereum.
Crypto Punks & Virtual Land in the form of NFT
Getting the right knowledge and research will take you on a great journey in the road of Virtual Currencies. Staying up to date and in touch will gradually make a lot of sense and the experience of these financial strategies is for a lifetime at the rate the world is developing.
It is not up for discussion whether it is a smart choice or not to invest because the future is unpredictable and it’s our conclusion and knowledge that will take us far in this developing world.
NOTE: THE ABOVE INFORMATION IS FOR REFERENCE ONLY AND NOT FINANCIAL ADVICE .
Written by: Rtr. Yehan Bandara
Edited by: Rtr. Loshini Gnanasambanthan