Education

Cryptocurrencies: How to Master Digital Money


Cryptography was born out of the need for secure communication in the Second World War. Mixed in a new digital era with elements of mathematical theory and computer science to become a way to secure communications, information, and money online. And, Crypto was born. So, If you ‘re looking for a precise definition then cryptocurrencies can be defined as:

A digital currency in which the encryption techniques are used to regulate the generation of currency units and verify the transfer of funds, operating independently of a central bank.

Cryptocurrency is a form of digital money. Shortly called CRYPTO, it is designed to make transactions super secure

But, what’s the true value of cryptos and why are they important?

The importance of something is derived from how valuable it is. Sometimes this manifests purely from a shared belief, such as in the case of gold, but most of the time it’s because something is useful. Most cryptos share a common set of inherent values: security, transparency (or lack thereof), immutability, global accessibility, speed and price. This is a common feature of almost all cryptos with some caveats.

Cryptocurrencies use a complex cryptographic approach to tracking and exchanging digital currency, one that builds on a digital ledger called a “blockchain.” More simply, a blockchain or “digital ledger” is a way for many people to have one common record of all transactions (similar to if everyone had a  connected notebook). Each time someone wrote in it, recording the purchase or sale of an item, the words appeared in yours and everyone else’s notebook. Each cryptocurrency has safeguards to prevent people from lying about purchases, or buying items  – this is common, basic description for crypto

Security: Centralized assets such as FIAT currencies, bonds, securities and title deeds are vulnerable to tampering. Either a central bank can change money supply, and corrupt or incompetent government can change or lose records or records of ownership can be damaged by water and fire, even if they are stored in digital form. Cryptos are, by their nature, decentralized. Records do not exist in one location but in hundreds or thousands of servers around the world.

Transparency: Almost every crypto is open source, ie. Its source code is available for everyone to see. For those who understand programming, the internal workings are completely transparent. It is possible then to trust the system without needing to trust any one person as the code only obeys logic. Furthermore, with the use of “explorers”, it is possible for anyone to see every transaction that has ever been executed since the creation of the crypto. Some cryptos distinguish themselves by doing the opposite and making it impossible (or so they claim) for anyone to track your transactions.

Immutability: Cryptos are verifiable, allowing for complete confidence that said transactions took place without the need to place faith in a third party. These records can never be changed (only is the complete ecosystem collapse).

Global accessibility: Geography is irrelevant when it comes to sending and receiving cryptos. As long as you have access to the internet, the cost and speed of the transaction is the same for someone with a fiber optic connection in London as it is for someone with a mobile connection in Ethiopia.

All Cryptos Are Bitcoin…?

The form of Bitcoin is, of course, a digital currency. One that you could buy, trade, and invest in online.

Bitcoin was born on Halloween of 2008 when math genius named Satoshi Nakamoto officially unveiled to the public a white paper which detailed the mechanics of this new form of currency – digital currency (later named cryptocurrency). Bitcoin became ‘famous’ because it was a first digital form of money which enable users to make transactions anonymous, secure, irreversible and, with a possibility to trade it from anywhere in the world with an Internet connection.

Find out more about Bitcoin: QUORA (ask, discuss and learn more)

Tags: ,

0 Comments on Cryptocurrencies: How to Master Digital Money

    Leave a Reply

    Your email address will not be published. Required fields are marked *