What Is Cryptocurrency?
'Money makes the world go round'.
Throughout history, money has come in different forms. Grain. Cattle. Gold. Currency. However, it has always had the same purpose: to make trade happen.
So, what is cryptocurrency?
Put simply, a cryptocurrency:
- Is digital money; and
- Uses cryptography -- the science of encoding information to keep it private -- to ensure that digital transactions are secure.
Making sense of digital dollars
We live in an increasingly digital world. Online platforms are making everyday tasks, interactions and transactions quicker, easier and more convenient.
And in this era of globalised citizens and economies, discontent with traditional currencies and financial institutions have fuelled desires to explore new ways of transacting.
Practically speaking, traditional currencies and transaction methods often attract high transaction fees. Transaction rules and regulations can seem prohibitive and arbitrary. Lag times common to transfers -- particularly international transfers -- can be stressful and inconvenient.
The decisions of governments and political interests also impact traditional currencies, inflating or deflating the value of money at a moment's notice. Take, for example, Zimbabwe's one trillion dollar note.
So, what if there was a way to transact without banks, governments and other third party institutions?
Given the digital age we live in, what if there was a way to transact online using digital money?
This is the very proposition that spurred thinking around the creation of cryptocurrencies, completely decentralised digital money and payment networks.
Efforts to develop the first cryptocurrencies began in the 1980s. However, it wasn't until 2008 when a white paper titled, 'Bitcoin: A Peer-to-Peer Electronic Cash System', was published under the alias, Satoshi Nakamoto, that cryptocurrencies truly gained traction as legitimate currency options.
The public launch of Bitcoin in 2009 made transactions using digital money -- without the need for third party oversight or services -- possible for the first time.
Since then, the number of cryptocurrencies in circulation and their usage has increased exponentially.
The case for cryptocurrencies
In a global and digital age, cryptocurrencies are making it easier to transact and trade online.
Forget two or three day transfer delays between banks. Because cryptocurrency is transferred directly between parties, transaction-processing times are drastically reduced.
Users can transact anywhere they have access to the internet -- without the hassles of exchange rates, frozen accounts, transfer limits and other frustrating and seemingly arbitrary rules and regulations.
With third party supervision of transactions unnecessary, cryptocurrency eliminates many of the fees common to traditional transactions. Cryptocurrency takes the 'middle man' out of online transactions.
The decentralised, public nature of the cryptocurrency software and systems means that anyone can check the validity of transactions at any point in time. This makes the system extremely secure. In addition, the maths behind cryptocurrency transactions makes fraudulent activity absolutely infeasible.
What about you?
Making trade and transactions possible wherever, whenever and between whomever, cryptocurrencies are digital money for a digital age.
Are you ready to make these endless trade and transaction possibilities a reality?