What is called “money” is ever-evolving. Cowries once used to be a medium for exchange, but overtime, we got the paper money we know today. Crypocurrency promises to be the money of the future.
What then is Crypocurrency?
According to Wikipedia, Crypocurrency is a digital asset designed to work as a medium of exchange using Cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.
It is a form of digital currency. Just like physical cash, digital currencies may be used to buy physical goods and services. Bank deposit is another form of digital currency. Crypocurrencies are bought, sold, transferred, and stored digitally.
There are over 800 forms of Crypocurrency, some of which include ;Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, the most popular being Bitcoin. Only 10 of these Crypocurrencies have market capitalization of more than 10 million Dollars.
Every Cryto-transaction for purchase, sale or exchange of Crypocurrency are encoded into a Block, and the Block added to a Chain. Once a new transaction is made, everyone on the network is notified. New transactions are verified through a process called “mining”, by encoders called “Miners”. Miners work to encrypt a code, adding it to what is called a BLOCKCHAIN,thereby creating a new coin.
BLOCKCHAIN technology is a non-centralized database where new transactions are encoded and stored. The BLOCKCHAIN Technology is believed to be impossible to hack. Every coin owner has their own digital wallet, where digital currency can be transferred or received. Coin owners are identified through a unique encrypted address.
Bitcoin is the most popular of all Crypocurrencies. It was created in 2008 by Satoshi Nakamoto. Bitcoin is accepted by many traders and customers all over the world. More than 21 million Bitcoin cannot be created, so Bitcoin is limited in supply. At inception, 1 Bitcoin was valued at 1,309 dollars, but today is traded at 8,200 dollars. Bitcoin in August set up another Crypocurrency – Bitcoin Cash, and still retained “Bitcoin”. This caused a lot of uncertainty among buyers, leading to a drop in prices. But the market and value has regained stability now. Bitcoin can be traded using the Dollars, Euros, Japan Yaun, etc. In naira, one Bitcoin is worth 2,936,759 million.
More and more investors are investing in Crypocurrency, increasing the demand, with its limited supply, thereby building up its value. Just like in the stock market, Crypocurrencies are traded by Brokers. Investors can own, buy or sell Crypocurrencies, making most gain by at low prices and selling off when the prices are higher.
Unlike paper currency, Crypocurrency is not regulated by any Government or Institution, and cannot be used to pay taxes. But like physical cash, can be used to buy goods and pay for services.