What is cryptocurrency and why you should learn how to use it right now
DanielJanuary 03, 2023
Last updated
DanielJanuary 03, 2023
Last updated
Cryptocurrency is a type of digital currency that allows users to transfer money in digital space. The term is a merger of the words cryptography (data encryption) and currency. Cryptography plays an important role in the field of cryptocurrencies as it provides reliable data encryption and protects transactions from third-party interference.
Why Cryptocurrency Transfers Are Different From Online Banking and E-Wallets
Why do we need cryptocurrencies and blockchain if technology already allows us to transfer any amount in any currency anywhere in the world - for example, using banking apps, PayPal or e-wallets? All these services allow you to quickly and easily transfer money to relatives and friends, buy goods in online stores, pay for the services of freelancers. But this is only a superficial similarity. In fact, these are two completely different technologies.
What is the difference between fiat currency and cryptocurrency?
The common currency of different countries, also known as fiat currency, is issued and regulated by the government. This applies to rubles, dollars, euros, yen, renminbi, won and any other currency.
In contrast, cryptocurrencies are decentralized, meaning that no government or other central authority controls it, does not issue it, and therefore cannot influence what happens within the network. The existence of a cryptocurrency is ensured by a network of participants (nodes) who run certain programs on their hardware and exchange information, constantly updating information about the state of the network. The registry of transaction information is called a blockchain.
The rules by which a cryptocurrency operates cannot be changed by any participant in the network, even those who own huge sums of money in that cryptocurrency, unless they have the full support of all participants in the network.
So, the money we are used to is a centralized system. For mutual settlements, we need an intermediary - usually a bank. With cryptocurrencies, we don't need an intermediary - you pay directly (peer-to-peer, P2P).
🧐What are the benefits of doing this?
A decentralized cryptocurrency network is resistant to any interference or shutdown attempts by authorities or other intruders. At the same time, the traditional financial system is not so difficult - just turn off the main server.
Imagine you give $1000 to your grandmother for her birthday. Only you and the bank from which you made the transfer know information about the transaction. Other customers at the same bank won't be able to see the transaction, so they won't be able to confirm that you actually sent the money.
An unexpected event occurred while sending the transfer. Suppose a meteorite hits a bank's server, or a senior employee decides to hit the "red button" and delete all transaction data from the past 15 minutes.
Money has been debited from your account but not sent to your grandmother, transaction confirmations are missing. You can't prove the fact of the transfer, you can't get the money back, and no one can confirm that you really transferred the money, because only you and the intermediary bank know.
Of course, such a scenario seems far-fetched and unlikely. But sure, some readers or their parents have witnessed unpleasant moments in the history of the former Soviet Union (USSR) when bank deposits were worthless. What used to be enough savings to buy a car is now barely enough for just one trip to the grocery store. The estimated loss is around $460 billion - think about it! Centralization makes this possible - one person or group of people in power makes the decision and pushes that very "red button".
We are living in a new era, and human beings are facing new challenges. Countries are actively exploring space—are they just for peaceful purposes? But equally threatening factors operate not at the planetary scale, but at the microbial scale. The Covid-19 pandemic has "turned the switch on the world's economies", impoverishing millions overnight.
As a result, centralized financial systems are unstable and vulnerable to various threats, and the number of these threats will only increase over time.
🔒Why Cryptocurrencies Are Safe and Hack-Proof
Cryptocurrency networks work differently. Once you make a transaction, information about it is broadcast to all the computers on the network, and there are millions of them. All members of the network are simultaneously aware that you have sent a certain amount of money to a certain network member at some point in time. Transactions are signed with your unique digital signature, confirming that the cryptocurrency wallet and the money in it belong to you.
Even if one of the network's computers fails, it will not affect the performance of the entire network or the integrity of transaction data in the blockchain. Let's imagine a more dire scenario: a country suddenly decides to shut down the Internet on its territory, and the cryptocurrency network loses all participants from Russia, the United States, China or other countries. Once again, the blockchain will live on, as the remaining devices will have a complete record of all transactions.
Why cryptocurrencies are the money of the future
Completely independent - no government, public organization or global commercial company can shut down the blockchain or ban cryptocurrencies.
Guaranteed Execution of Transactions — Your transfer cannot be lost and no one can delete it from the blockchain as millions of computers record it in the distributed ledger the moment it is executed.
Complete anonymity - network participants can only see the digital signature, but do not know your name, nationality or the country from which you made the transfer. The same goes for the receiver of the transaction.
Accessible to everyone regardless of citizenship, social status, country of residence, document availability. Creating a crypto wallet does not require a passport or phone number. All you need is a device with internet access.
✔️If you want to store your funds safely, then it's time to create a cryptocurrency wallet.
✔️If you want to send and receive money anonymously anywhere in the world without being accountable to anyone, then it's time to try cryptocurrency transfers.
✔️If you want to be financially independent from any disaster, political decision, decision of those in power, then start mastering the world of cryptocurrencies.
The future does not ask if we are ready. It's here, and we can accept it, or deny it and pretend we've had a good time. The choice is yours, the responsibility is yours!
