Firstly, let’s start with a common myth – Cryptocurrency is a scam.
The answer is quite simple, cryptocurrency is not a scam!
It is also not going to come and go, it is here to stay
So then, that begs the question “what does it all mean? just a lot of jargon right”
I would like to go back to the old money era to:
- Properly dispel every form of doubt and,
- Lay a solid understanding right on the tablet of your heart
When money started, it started with a form of “barter system”.
Here, our grand-dads and grand-moms had to exchange items with items, meaning if you wanted to buy an iPhone during that era, you would have to bring something else in place probably, a fridge.
Things looked good at first, but then as this system continued, setbacks began to surface. For example, what if you wanted to purchase a yard of silk from me and then you are willing to exchange it with a bottle of nice wine but I happen to not be interested in the bottle of wine?
Or what if you are willing to sell an item to me in which I am interested but then what I have for exchange is far bigger in value than what you want to trade with me
That births the problem of fair trade
Gradually, people saw that this method was not effective, so they decided to move to the another form of monetary system which we now know as the era of “gold and valuables”
This was a bit higher than the barter system but still not advanced enough for what the populace needed. The major problem here is the fact that you have to always go to the goldsmith to get a written draft specifying that you truly have a specific amount of gold/valuables
~ It was stressful and not reliable
Finally, things moved to the era of “paper money” in which we presently operate. The era of dollars, euros, naira!
Things stepped up an entire notch here, no barter, no gold, no valuables, just the government backing.
The government decided to make money a printed currency, no gold, no valuables.
The major freedom that this form of money brought was tfirst:
- The store of value. People could easily buy something without exchanging their important assets for it. Also, if what they bought was less than what they paid, they can always get their change..
- This money was easier to carry about unlike the first two system of money
After making their decision, they printed some form of paper, signed on it, and announced to the world that this is money (legal tender).
This monetary system was what the people needed, the government also went ahead to create different currencies carrying different stores of value e.g. $1, $100 e.t.c.
This way if people find themselves buying something with a much lower value than what they currently hold, they are right to demand the remaining store of value, now known as “change”
This is the money system we have been using since and I don’t think there is a problem with it, or do you think there is?
Well, let’s not jump to conclusions fast
The paper money era system in fact also experienced a little upgrade to online banking where you can easily transfer money to people from all walks of life without visiting the bank.
Everything is amazing right, so what exactly is not right?
You may not know but you don’t have complete control over your funds.
There are times you wanted to withdraw but cannot, the bank gives you some excuse as to the reason why. Then they promise you with a time duration that they will get it fixed.
The truth is most of the time, they were doing something with their funds, they set the rules, and we the civilians can do nothing else but obey even if it’s indirectly. So, they tell you to wait for hours or even days depending on what they say.
There are also times when banks would suddenly deduct charges from everyone’s account with a cooked-up reason for that. And everyone has to somehow believe them
Also for those who have done international transactions, you can attest to the fact that those transactions are not that fast
To crown it all, the bank knows the account balance of every single individual or company that has an account with them. This means if a scammer hacks into a bank and lay their hands on information in the bank, they can easily place you on their target list just from this.
Some countries also charge neck-gripping taxes on every amount stored in the bank.
In fact in some countries, they even contact individual account owners with huge funds for one reason or another.
From all this, we can spot defects in the current banking system
All this is what the world of cryptocurrency aims to solve, and they do this through a technology called “Blockchain”
Check here for the definition of blockchain >>
CONTINUE FROM HERE IFE
Fast forward to cryptocurrency, we are still dealing with the same “money” but this time around, it is digitized, still the same everything, but it is decentralized i.e. no everybody is in control
The major difference between the blockchain industry and the traditional banking system is the extent of individual’s control over their money.
In the traditional banking system, we have to trust the central bank and the government that the paper we are holding will be a legal tender but cryptocurrency and blockchain world, we have to trust no one.
Transactions cannot be denied, everyone has a copy of the behind-the-scenes code and transactions that go on every day. So it is impossible to cheat.
In the crypto world, there are still banking platforms just like in the traditional banking system, but they have little to no control, unlike the authorities in today’s banking system.
Here, you can choose when to send your money, when to keep it, who to send it to, and everything happens in matters of seconds, not hours, not days.
What then is Cryptocurrency?
Cryptocurrency is a form of digitized money. It also stores value and is a digital asset.
The most popular example would be Bitcoin, founded in 2007 by an anonymous person using the name “Satoshi Nakamoto” Bitcoin is now infamous well valued at over $67000
What this means is that if you invest your $10,000 6-figure monthly income in to bitcoin, you will still not have enough to purchase 1 bitcoin.
How to buy Bitcoin on Binance >>
The difference between Bitcoin and dollars is that Bitcoin can sharply rise or fall, meaning that one Bitcoin can be worth $50,000 today and then be worth $15,000 tomorrow.
This is generally the behavior of most crypto assets – volatility.
Except for a few coins called stable coins. These coins have been pegged to the price of dollars and cannot change. e.g. 1 USDT coin is pegged to a dollar e.tc
These are the coins most people use to save money in cryptocurrency while they trade with other coins
Should I invest in cryptocurrency?
Disclaimer: This article is not a financial advice article but an educative one, so do not take anything here as financial advice.
That aside, even if you are not going to invest in cryptocurrency, it is very okay for you to have some practical knowledge of the basic things like depositing, withdrawing, transferring e.t.c.
What I mean is you can open a crypto exchange account like Bybit, or Binance, and try sending a small amount of money just to understand the basics of how everything works.
Don’t be afraid, the moment you deposit your first dollar, you will understand better. Although cryptocurrency is volatile, you should not be terrified. It’s not like you will lose your money the moment it enters.
When you make a deposit into your exchange account, the money is not going into a coin, it is just staying in the “Funding” account – Money saved in the funding account is not subject to risks.
It is pretty much like you are saving in a bank.
There are still things you need to know in cryptocurrency industry but this article marks the beginning of your journey.
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Peace.