Cryptocurrencies: A Simple Guide 101

Cryptocurrencies are like the US Dollar, they can be used to pay for products and services. 

Dollar bill payment

What’s the colour of crypto? Is it a coin or printed on paper?

Well… cryptocurrency does not exist physically. They are digital money meaning you can’t touch it. One of the use cases of cryptocurrency is that it can be used as a form of investment.

The Creation

Once upon a time in the year 1990, some geniuses thought it was better for people to control their money. No need for governments or banks…just the people in control of their own money.

And so the invention of cryptocurrency kicked off but it was not a success until 2010

2010 was the year the first successful digital money was created after many attempts. This successful invention is called BITCOIN.

Bitcoin was invented by Satoshi Nakamoto. But the interesting thing is that no one knows who that is. For all we know, s/he or they may not be from our planet.

After the creation of Bitcoin, other cryptocurrencies have since sprung up including; XRP, Ethereum, USDT and 5000 others.

The Special Features

Cryptocurrency is strictly digital i.e it exists only on your computer and your phone. No paper, no coins and no Central Cryptocurrency Bank.

Cryptocurrency is shared across so many computers across and around the world. And there is no special computer that acts like the boss. All the computers share the same information and this is known as DECENTRALIZATION. No centre.

Crypto participants send their cryptocurrency directly from one person to another without a bank. Think of handing a bar of chocolate to a friend. Do you need help with that? Not really! This is possible because cryptocurrency allows peer-to-peer transactions.

Cryptocurrency is a worldwide currency. It’s not created to suit one country. It can be used by anyone in any country in the world. We can rightly say it’s global.

Sending cryptocurrency is fast, easy and relatively cheap regardless of the country of the person you are sending it to.

Lastly, cryptocurrency can be converted to your local currency and vice versa.

The Process 

Cryptocurrency like bank transactions has a process. Let’s use a story to explain it. Mimi and Timi both use crypto.
They both have Bitcoin wallet apps downloaded on their phones.

Deby sends 10BTC to Timi’s wallet. But before Timi can receive the 10BTC from Deby, computers on the Bitcoin network would check to see if Deby truly has 10BTC in her wallet and when they confirm this, they can record it in their “register”.

Then the 10 BTC will go to Timi, Transaction completed!

The Perks

Cryptocurrencies like Bitcoin, Ethererum are gaining popularity. In 2010, it was said that a man bought two pizzas for a large amount of Bitcoin. Today,that amount of Bitcoin could be a fortune and two large pizzas is the least of what that kind of money can buy.

Anyone can make money trading cryptocurrency.
1 Bitcoin was less than $50 in 2012. If you had bought just one Bitcoin then, that Bitcoin would be worth over $9,000 today. Great investment?

Cryptocurrency prices are not stable. Sometimes it goes higher and other times, it drops. Crypto traders make their money from buying cryptocurrency when the price is low and then selling when the price goes up.

Arbitrage is another option to make money. It means buying from crypto exchanges where the price of sy Bitcoin is $9,000 and then selling it on another exchange where the price is  $9,500

You can start using cryptocurrencies by downloading crypto apps like Quidax, Coinbase, Kraken or Exodus.