Firstly, let’s start with a common myth – Cryptocurrency is a scam
Well, well, well
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 then I’m not 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 begs the question of relative value
So then, when people saw that this method was not effective, they decided to move to 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 then 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 trust.
The government printed some form of paper and then signed on it with an official mark to confirm that it is legal tender. This alone was what the people needed, then the government 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 then I don’t think there is a problem with it, or do you think?
Well, let’s not jump to conclusions fast
Now, the traditional banking system also has some upgrades to online banking where you can easily transfer money to people from all walks of life without visiting the bank. Everything is amazing right, but then this begs the question “Then what is wrong with it”
You’d agree with me that you don’t have complete control of your funds. There are times when people want to withdraw but cannot because the bank has something they’re currently doing with their funds.
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
Here, we are still dealing with the same “money” but this time around, it is digitized, still the same everything, but then it is decentralized.
The major difference between the world of cryptocurrency 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 in the world of cryptocurrency and blockchain, 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 for anybody to cheat.
In the crypto world, there are still banking platforms just like in the traditional banking system, but then they have little to no control, unlike the authorities in the 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 days, not hours.
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 by the name “Satoshi Nakamoto” Bitcoin is now very popular valued at over $27000 for one.
What this means is that if you buy $20,000 worth of BTC, you would have bought close to 1 BTC.
How to buy Bitcoin on Binance
The major difference between Bitcoin and dollars is that Bitcoin can rise or fall, meaning that one Bitcoin can be worth $50,000 today and then be worth $15,000 tomorrow.
This is generally the behaviour of most crypto assets – volatility.
Except for a few coins called stablecoins, these coins have been sealed to the price of dollars and cannot change. e.g 1 usdt pegged to $1, BUSD e.tc
These are the coins most people use to save money in cryptocurrency while they trade with other volatile coins like BTC, ETH e.t.c
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 there, it is very okay for you to have some practical knowledge of the basic things.
What I mean is you can open a crypto exchange account like Binance, and try sending a very minute amount of money just to understand the basics of how everything works.
This has to be an amount you can afford to lose
If you use this link to sign up, you will be supporting me at no cost.
Use this referral ID: 458127463
Any other questions you have, please put in the comment section!