Money as a medium of exchange has evolved throughout the history of man. Through the stages, each medium has been a trusted store of value. Therefore, people believe that the medium will have the same worth in the future as today.
Before paper money, people traded goods and services for other goods and services, better known as the barter system. Later, people used precious metals like gold and silver to pay for products. These metals were bulky and less convenient so, financial institutions started to offer gold certificates as currencies that owners could conveniently use to facilitate trades. Today, most governments issue fiat currency which is regulated by central banks. Even this is changing with the introduction of cryptocurrencies.
A Digital Currency for a Digital World
A cryptocurrency is a digital currency that can be used as a medium of exchange. Cryptocurrencies utilize cryptography to secure and process financial transactions and regulate the issuance of new units.
The digital currencies run on blockchain technology – using cryptography, an online ledger securely records transactions on the network then distributed the records to network users to authenticate the transactions. This process decentralizes the governance of the network, ensuring the network remains transparent and secure.
Unlike fiat currency, cryptocurrencies are neither issued nor regulated by a central authority. For a digital world, this distributed ledger technology offers numerous advantages including, privacy, transparency, and security.
Bitcoin and Altcoins
There are at least 5,000 cryptocurrencies and, Bitcoin (BTC), which is the first-ever cryptocurrency, remains the most popular of them all. All other cryptocurrencies are colloquially referred to as altcoins in the crypto world. Top altcoins include Ether (ETH), Binance coin (BNB), Ripple (XRP), Cardano (ADA), and Litecoin (LTC).
Why Cryptocurrencies?
Cryptocurrencies have received compliments and criticisms alike. Backlash received is often due to their price volatility, questioning the ability of Bitcoin and altcoins to store value. However, this inference doesn’t hold water. Cryptocurrencies are decentralized and barely regulated, making them speculative assets, and since they are an emerging technology, this volatility is expected. Moreover, cryptocurrencies have progressively advanced and their values are steadily appreciating.
In addition to privacy and security, cryptocurrencies facilitate faster peer-to-peer funds transfer, rendering trusted third parties obsolete and making transactions cheaper.
What’s more, transferring cryptocurrencies across borders is simple, with no deadlines or transaction limits.
For some cryptocurrencies like Bitcoin, users can earn rewards (mining) by approving transactions on the network.
Further, most cryptocurrencies have a maximum token supply which makes them deflationary and ensures that the currencies' value appreciates since their demand increases as supply falls gradually. This is especially important given central banks print more money devaluing fiat currency through inflation.
The Future of Crypto
Cryptocurrencies started with barely any value. The first bitcoin transaction had 2 pizzas paid with 10,000 BTC (currently valued at over $500 million). The transaction occurred over a year after BTC had launched and today, crypto is embraced more. Fintech companies like PayPal and Square have integrated crypto services into their operations. Also, electric automaker, Tesla, has started accepting BTC payments for its products. The increasing adoption of crypto into the mainstream makes it even costlier to overlook the potential for these digital assets.
Buying Crypto
Need to get started on crypto? Cryptocurrencies are traded on marketplaces known as crypto exchanges. These platforms allow you to buy, sell, hold or transfer your cryptocurrencies from an online wallet. Top crypto exchanges include Binance, Coinbase, Huobi Global, OKEx, Kraken, and Uniswap. Most of these platforms allow you to buy crypto using fiat currency like USD, Euro, and GBP. Signing up on any of these accounts takes less than 10 minutes, then you are ready to start owning crypto!
