What is crypto-currency?




 
what is cryptocurrency

You may be new or totally confused about the terminology called Cryptocurrency,  and you could be considering "what exactly is crypto-currency, how does it work, and what's really in there for me or the masses”? In this post however, I’ll be taking you through the word crypto-currency, how it works, all you need to know, and why crypto-currency is the way to go in this very digital era.

 
Before I really takes you through all you need to know about cryptocurrencies you've been hearing people makes noises about, in a layman understanding of how crypto-currency works, I’ll be comparing it to Airtime Subscription (Recharge card) of the telecommunication network, used for internet access subscription as applicable in Nigeria.





 
In Nigeria as a case study, tele-communication network was introduced in Nigeria in a year 1999 precisely, and before then, there was no GSM network communication system in Nigeria, neither was there any cash receiving and transferring devices; and if you wanted to reach out to your friends and love one afar, you’ll only had to write them a letter, package it, and get it posted to post office for onward delivery either by rail or shipping. This sometime takes weeks and even months to get your massage delivered, or even getting your information (data) altered on transit. 
 



The introduction of tele-communication network in Nigeria as a case study, which is the transmission of signs, signal, massages, words, writing, images, and sound or information of any nature by wire, radio, optical or other electromagnetic system as brought about unimaginable changes, where we could now reach out to friend and love ones, send or receive information, and even transact businesses through the uses of the internet data subscription plan. 

This is to say, for you to have any access to accomplishing any of these tele communication benefits (transmission of signs, signal, massages, words, writing, images, and sound or information of any nature by wire, radio, optical or other electromagnetic system), you'll have to gain access to internet network which requires having your network subscription plan activated. This network subscription plan (which is a paid service), acts the same ways as cryto-currency works.
 
Crypto-currency in a layman understanding works typically like airtime/network subscription plan – your paid data subscription plan for accessing the internet network and achieving other purposes. Why? Reasons because they are not physical cash you can touch with hands or hold like paper money, but they (network data subscription plan) can be use to make phone calls, send a certain amount of airtime cash to a third party.

Comparing Crypto-currency with network/airtime is not enough, but the works similarly. Just like there are other airtime or network communication services in Niegria like MTN, Glo, 9Mobile, Airtel etc as a case study, so are similar thousands of crypto-currencies also known as Altcoins for store of value, digital transaction, exchanges, trading, mining and profitability.





 
Let me spare you all adooos and go straightly by telling you what exactly is crypto-currency, how it works, and all you need to know all about it. Before I provide you with globalize deification of crypto-currency, I’ll firstly define crypto-currency to you in my own understanding.

 
"Cryptocurrency is an electronic currency, cyber money and a virtual currency that makes and accepts payment without interference of any third party, which exchanging digital currency for other digital crypto-currencies, whose price and value also rises or fallen based on the demand and supply for the coin."

 
Did that makes any sense to you? Here's how cryptocurrency is been defined according to Wikipedia,
  

Crypto-currency is a digital money asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of addition units, and to verify the transfer of asset.

 
Cryptocurrency as a virtual currency, cyber coins and the future of money has seen a global surge of interest in recent years, although, some people are yet to understanding exact how crypto-currenies works, banks, governments and many companies however, are aware of how it works and its importance.

There are virtually two types of crypto-curreny and that includes;


  1. Coins - cryptocurrencies operating independently.
  1. Tokens - cryptocurrencies depending on another platform to operate.
 
The most notable of crypto-currency is Bitcoin that have captured the imagination of some, structure fear among others, and confused most people out there such that in-spite the noise and the press release overwhelmed majority of people, even bankers, consultants, scientists, and developers have a very limited knowledge about cryptocurrencies, and such have generated a lot of questions like:
 
  • What is cryptocurrency?
  • How come about cryptocurrency?
  • How does cryptocurrency works? 
  • Why should I join cryptocurrency bandwagon?
I’d early explained/defined what cryptocurrency is, and would like to move on to the generated next questions.
 

How come about crypto-currency?

 
 
Although, there was some failed attempts of inventing a distributed digital scarcity based currencies (the pre-Bitcoin era 1998-2008) with ledgers secured encryption by Dai of B-Money and Nick Szabo of bitGold. In late 2008, the mysterious Satoshi Nakamoto, the unknown inventor of Bitcoin – the first established and still the most important crypto-currency posted a paper on a cryptography mailing discussion group about Bitcoin - “A Peer-to-Peer Electronic Cash System”. 
 
Satoshi Nakamoto announced the release of Bitcoin as:
 

a new electronic cash system the uses a peer-to-peer network to prevent double spending. It is completely decentralized with no server or central authority
 

The most about Satoshi invention was the fact that he found a way to create something decentralized cash system after several failed attempts to create digital money then in the nineties. Thereafter, Bitcoin software was made publicly available in 2019 for mining (a process through which new Bitcoin are created), and transaction recorded and verified on the blockchain.

Based on Bitcoin open source code, system storing value, and somewhat less-effective with near-instantaneous transaction transfer all over the world, many have noticed its crucial advantages over government money and its raising a lot of global interest. This has brought a lot of threat to government paper money, and regulatory bodies have shown they lack understand of technological topic, and one of the most complex.



Based on Bitcoin threat of possible elimination of Government paper money, governments have struggled to banned technologies like Tor and encryption; it seems impossible for government to gain ability to truly impacting Bitcoin and its contemporary alt-coins – in a way that could impede Bitcoin process. For example, in December 2013, the Chinese government banned financial institution from using bitcoin, causing a downturn in the cryptocurrency’s value

In April 2014, several Chinese bitcoin exchanges and their bank accounts were also closed by Chinese government. That was a clear indication that the invention called Bitcoin posses a great threat (limiting access) to government traditional money - the real world currency.

The U.S has also made localized attempts to regulate specific aspect of Bitcoin like New York State requires a ‘BitLicense’ for bitcoin regulated business with specific rules for employee vetting and identification. While some of those instances are more concerning than others, none of it has stopped bitcoin’s growth. 






All government efforts to crackdown Bitcoin growth spurred more public concern for Bitcoin, and even loopholes for exchanges to stay in Bitcoin business, further leading to 25% rise in Bitcoin’s price. United State Treasury later openly categorized Bitcoin as a decentralized virtual currencies, and as well, the first established crypto-currency haven't gone through huge successes and satisfaction concerning the alias Satoshi Nakamoto.

The great success of Bitcoin paved ways for emergence of other cryptocurrencies - (altcoins). The next cryptocurrency to Bitcoin was Litecoin in 2011, followed by Peercoin, Dogecoin and so on. The year 2017 became an exited year in digital economy and many alt-coins are mimicking bitcoin script and driving mechanism to build their own decentralized proof-of-work systems, become their own market leaders through initial coin offering (ICO), which thereafter, coin goes live at the exchanges for trading.

Currently, there are over 1381 altcoins (cryptocurrencies) being white-listed live at coin market capitalzation (platform taking records of all altcoins statistical data), and Bitcoin is still no.1 best known cryptocurrency that has soared in price as high as $20,000 in late 2017 before losing 30% of its value in recent days, sparking fresh speculation of fear of a bubble…

Imagine if you invested into bitcoin in 2009 when 1 Bitcoin was selling at $1 per price, or even in 2016 when it was less than $2,000, guess what would have been your profits today? Currently, Bitcoins has dropped in value to $14,000 based on competition by alt-coins and equally, the introduction of Enterprise Ethereum Alliance for Smart Contract.

In-spite of these competitive developments against Bitcoin, Bitcoin maintains it momentum as a crypto giant and the mother of alt-coins with market capitalization of $240billion.

 

 
 
There are several key components of bitcoin and its contemporaries alt-coins, which makes them successful as methods for storing values, making transaction, easy to transfer, with no middle-man required, not linked to any territorial or financial institution, neither able to link to owners whose identity is unknown. These are government big problems wanting to have a greater say on how cryptocurrency should rather operate.
 
 
how bitcoin works
 

The ways crypto-currencies works is summarized into three basic components, which includes:
 

1. Public Ledger
 
Public ledger is where all confirmed transactions from the start of cryptocurrency creation are stored through cryptographic techniques of ensured legitimate record keeping. The ledger ensures corresponding digital wallets that calculate an accurate spendable balance, where new transactions can also be checked to ensure that each transaction uses only coin currently owned by spender. This public ledger is otherwise known as a “transaction block chain”.
 

2. Transaction
 
Fund is transferred between two digital wallets, which get submitted to a public ledger for confirmations. The transferred transacted fund between wallets uses an encryption signature (encrypted piece of data known as cryptographic signature) to provide a mathematical evidence of proof of transaction between the two wallets owners, while the ‘miners’ mine (confirm transaction as added to the public ledger). At the process of transacting the coin, more coins are created of mined.
 
The crypto-currencies transaction protocol involves:
 
  • Irreversibility of fund – With the way cryptocurrencies and Blockchain operates, after you’ve clicked on the send button, there is no return or refund ability of your money of any kind or any means, most especially when the said transaction has been confirmed.
  • PseudonymousThe relation between transacted wallet owners and the cryptocurrencies is pseudonymous and not anonymous. Neither coin transactions nor coin accounts owners are connected to real-world identities. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of the coin owners account with those wallets addresses.
  • Fast and globalTransactions are propagated in the cryptographic blockchain network and are confirmed in a couple of minutes. This is a global network of computers completely indifferent of your physical location. It does‘t matter if I send Bitcoin to my neighbor in the same location, or to someone on the other part of the world.
  • Secure Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers make it impossible to break this scheme. A Bitcoin wallet address is more secure than Fort Knox.
  • Permissionless – You don‘t need anyone permission to start using cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies (altcoins) without any one preventing you. There is no gatekeeper or the middle men.
 
3. Mining 
 
Mining process of how cryptocurrencies works is a mechanism by which Bitcoin and altcoins prevails. This is simply a process of adding transaction records to transaction block chain. Mining cryptocurrencies is verifying cryptocurrencies transaction, which users are rewarded. Miners are paid any transaction fee as well as subsidy of newly created coins.
 
In order to add the transaction to the public ledger, the miner must solve an increasing complex, computational problem (mathematical puzzle). Cryptocurrency as open source, anyone can mine. The first miners to solve the puzzle add a ‘block’ of transaction to the public ledger. This serves as a purpose for disseminating new coins in a decentralized manner, as well as to allow nodes react to a secured temper resistant consensus.
 
Once a block is added to the ledger, all corresponding transaction are permanent and small transaction fee is added to the miners wallet (along with newly created) coins. This is what gives value to the system, and it’s known as “proof-of-worksystem. In Bitcoin, it is based on the SHA 256 Hash algorithm.


Why you should join crypto-currencies Bandwagon.

 
 
We are living in the internet age, a computerized world and data driven economy, it is right and high time to get along and equip with crypto knowledge of which otherwise, means that you've personally choose to be left behind to face obscurity; this is simply because cryptocurrency is the future of money.
 
You may have been doubting and calling crypto-currency a SCAM, or a next ponzi to MMM. That’s basically a product of limited knowledge of this current digital economic revolution. Take it or leave it, cryptocurrency has come to STAY. The U.S, Chinese and other governmental bodies have made several attempts to eliminate crypto-currency but all efforts has proven abortive, prevailing crypto-currencies.
 
Bitcoin led the revolution and several hundred or thousand have followed. Governments had no option than approving cryptocurrency as the real world decentralized currency. The truth is, cryptocurrency is the future of money posited to replace the government paper/physical money we spend; gradually displaying real cashless economy and the world global currency.
 
Are you still the doubting Thomas, or you simply don’t want to shun mediocre by working out your ass to get along with this great monetary conceptual opportunity – the future of money? 






If you had the opportunity to invest into Bitcoin when it was half a cent ($0.5) in 2009, or even $2000 in January 2017, would you have invested into it? As at December 2017, bitcoin rose to $19,000 before dropping hovering between $14,000 with market capitalization of $240billion, which might be attributed to demand for other altcoins and introduction of Enterprise Ethereum Alliance
 
Ripple coin (XRP) on early hour of Friday 29th 2017, surpasses Ethereum (ETH), seating comfortably as 2nd most valuable coin next to Bitcoin with coin market capitalization of $80billion.

As at January 1st 2017, Ethereum was $7.98 and today its $880.40 (that’s 10,000% increments) with market capitalization of $60billion.

The fourth expensive crypto-coins as currently listed at the coin market CAP is Bitcoin Cash (BCH) with $50billion, followed by Cardano (ADA) with $16billion market CAP, and Litecoin (LTC) with $16billion market CAP and so no on. You can visit https://coinmarketcap.com to get all the coins prices and other statistical data.

This is just an eye opener, and a starting point of crypto-currencies world growth. So, I’m sure you’ll also love to take advantage of this crypto-revolution to change your own story for good with whatever amount you’ll sub-sequentially be investing into crypto business?. I hope I don't needs to tell you that crypto-currencies have turned so many poor guys into multi-millionaires?
 
My advice is that you conducts your due research about up-coming ICO's and try to invest on those seeming promising, as well as, investing into top 50 coins as listed on the coin market CAP. Most of these coins are insanely cheap now in prices, and that’s an huge opportunity for you and me to learn from the mistakes of missing Bitcoin opportunity when it was half a cent ($0.5) or even $1 in 2019, and $700 in 2016.

By embracing other smart altcoins simply means not subjecting your cryptocurrency investment portfolio to only Bitcoin, thereby, positioning yourself for exponential profits as these invested altcoins prices keep raising based on development and demand for them. For example, there some are insanely cheap with huge opportunity to invest into the first ten crypto-currencies as listed at the coin market CAP.

Bitcoin (BTC) currently hovering between $14,000 price tag

Ripple coin (XRP) is currently sold at $2.33 price tag.

Ethereum (ETH) is traded sold at $88.03

Bitcoin Cash (BCH) is currently sold at $2514.52

Cardano (ADA) is currency traded at $0.782474

Litecoin (LTC) currently sold at $248.98

MIOTA (IOTA) at $4.21

Steller coin (XLM) at $0.561580

NEM (XEM) is sold at $1.10

Dash (DASH) is sold at $1148.15

Are you seeing what I’m seeing? In-spite of what seems like you and I missed the opportunity to acquire Bitcoin when it was insanely cheap, it is never too late because Bitcoin price would keep rising; however, its a lesson for investing now into other cheap, smart and proactive cryptocurrencies (altcoins). 

Although, crypto-currency has no negative effects on your business model, the indication is that's where the digital trends are heading in the near future; though, we might not feels it dramatic impact now, its diligently right to get prepared and explore the crypto-currency's potentials so that we don’t get left behind.





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