So you’ve been hearing of Crypto and seeing cash tags like BTC, ETH etc. and you’re lost because everything seems like shorthand to you. In this article we will try to break it down as simple as possible.
What Is Cryptocurrency?
Cryptocurrency is a form a “DIGITAL MONEY”. Now if you have N10,000 cash and you deposit in a bank, your money is now in your account and only represented by numbers.
You can still pay for goods at the Supermarket, pay for your Uber either through transfer or debit card with those numbers, now that figure you see when you open your bank App is digital money.
However, what sets cryptocurrencies apart is the technology behind them.
I know you don’t care about technology, only how much is left in your balance but it’s important to know how this technology benefits the society.
Cryptocurrencies rely on a technology called blockchain, which is decentralized (meaning no single entity is in charge of it).
Transactions are confirmed by every computer in the network.
The first ever cryptocurrency was Bitcoin until 2011 when Altcoins were created. Now we have over 2,000 Altcoins created.
Simply put, any coin that is not bitcoin is an altcoin.
What Are The Benefits Of Cryptocurrency?
There are many benefits that sets cryptocurrency apart from the traditional money. But on this article I will list a few.
1. Reduces Corruption:
Crypto tends to distribute power among every member rather than one single entity i.e Bank.
2. Eliminates Excessive Money Printing:
Central banks have the ability to simply print money at anytime but printing more money to pay Government debts is like putting a bandage on a broken leg. It rarely solve the problem, it only increases the money in circulation, causes inflation and devalues the currency.
Now you may wonder, if there is more money in circulation, isn’t that a good thing?
Now if you have N50 note for egg and you buy 1 and another N50 note is given to you for egg, you go to the shop to buy again, and the shop owner has just 10 eggs, now you’ve increased the demand for eggs. In order not to sell it all out, she’ll increase the Price of egg to N70, if more people like you come, she’ll increase the price again to N100.
Now you’re back to square one, you have more Naira notes but can no longer afford egg. That’s why Nigerians are rich in “Millions” but 1 million is not up to $2,500 because the Government thought it wise to keep printing money.
Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply. So you’re simply buying what someone else sold. That way it stays valuable.
3. Crypto Gives You Control Over Your Money:
With traditional cash, you’re basically giving away all your control to central banks and the government. At any point, your government is able to simply freeze your bank account and deny your access to your funds and there’s literally nothing you can do. With cryptocurrencies, you and only you can access your funds.
Your wallet has a key that only you should be able to access. No bank or government can freeze your crypto assets.
Blockchain is a great technology for storing financial records or any other data where an audit trail is required because every transaction is tracked and permanently recorded on a public ledger.
Now Gear Up to Make Transactions.
Discover where you can get your hands on different cryptocurrencies, and get to know your cryptocurrency wallets and exchanges.