What is Cryptocurrency?
A cryptocurrency, crypto-currency, or crypto is a collection of binary data which is designed to work as a medium of exchange.
OR
A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.
In plain English: Cryptocurrency is money that only exists digitally.
Different between Crypto and Fiat
As Crypto only exists digitally, its counterpart, fiat, also only exists physically. Bitcoin is the most popular Crypto out there. It only exists digitally on the Blockchain (The technology that powers Crypto: A blockchain is a digitally distributed, decentralized, public ledger that exists across a network).
Examples of Crypto
There are thousands of Cryptocurrencies in existence today. The most popular you’ll hear about is Bitcoin. Others include:
Ethereum
Cardano
DogeCoin
Solana
Ripple
Luna
Binance coin
You can view a list of all coins here: https://coinmarketcap.com/all/views/all/
Examples of Fiat Currency
Fiat currency is money issued by governments as legal tender. Examples are:
US dollars
Ghana Cedis
Japanese Yen
Australian dollar.
Basically, any currency that has a physical representation is classified as fiat currency.
Why the buzz around Crypto?
Cryptocurrencies are decentralized. What this means is that it’s not controlled by a central entity like the government. For example, the Ghana cedis is controlled and managed by the Bank of Ghana. This gives them the power to print any amount of Ghana cedi notes as much as they want.
With Crypto, the amount of the currency is limited and there can only exist the amount of the currency. There are a few exceptions to this based on how the currency was programmed on the Blockchain. Such currencies are usually not considered to be a good choice to invest in.
Blockchain: the Tech that powers Crypto
The Blockchain is the technology that powers all Cryptos. A blockchain is a digitally distributed, decentralized, public ledger that exists across a network. This means no one can tamper with the transaction once it goes live.
This makes it a secure way to build apps and platforms without worrying about anyone tampering with the data.
Good or Bad investment?
In all, Crypto is a good investment if you know what you’re doing. There are people who see Crypto as a means for criminals to send money without a trace, therefore avoiding the authorities. This is also true with fiat currency.
The technology itself is not bad – it is bad people who use it for bad things. It doesn’t make the tech itself bad. It’s just like how criminals are able to launder money (fiat). Does that make fiat bad?
Final thoughts
There are a lot of things to learn in Crypto. As it gains popularity, more tools, applications, and solutions will be built for and around Crypto.
The best way to keep up is to read more about blogs such as this and watch videos as well. This way, you’ll stay informed.
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