Table of Contents
What is cryptocurrency?
Cryptocurrency Is a digital currency that is used to buy, sell, and transfer
anything of value without involving any third-party system or central authority
like banks. It is used as an electronic payment in which people from all over
the world can transact with each other using digital cash without relying on fiat
currency which is limited to a specific country. Learn more
You can not understand well
cryptocurrency without knowing about blockchain. Blockchain is what makes this
word called cryptocurrency.
What is Blockchain?
Blockchain is a
decentralized distributed digital ledger that stores and records transactions or
anything of value permanently. To understand fully this concept you have to
hold a real image of the traditional monetary system and how it works. In
traditional systems, we have databases that are managed and owned by financial
sectors. All the transactions that are done in our daily life activities are
being monitored and controlled by the government and financial sectors such as
Banks that own the business. In other words, we can say our financial
transactions are controlled by middlemen or central authorities which are
Government and financial sectors like Banks.
What is the problem of this
control?
With this control, you
don't have full access to your financial data.
Let's take the example
of banks
Banks limit the amount you
can withdraw per day
Banks have access to your
account balance
Banks can share your
financial Data and personal information with the government because the
government limits and controls the amount a normal citizen can hold in an
account.
Banks can manipulate your
financial data
You don't have access to
financial services 24 hours a because financial sectors such as Banks operate only 5 days a week
Solution
The solution to all these
problems is the use of Blockchain technology. Blockchain removes middlemen and
allows a person to directly access services such as financial and government
services without any authority control.
How a person can access
services directly without any middleman in between or authority control?
This can be well explained
using Bitcoin, the first digital currency that opened the door to all digital
currencies available today.
How does Bitcoin(BTC) really work?
BTC is the first
cryptocurrency that brought the idea of blockchain to the world and opened a
door for other entrepreneurs who started to create new blockchains that bring
more value to societies.
Bitcoins are generated by
a process called mining.
Mining is the process of validating transactions occurring in the
blockchain This process of veryfying transactions is a competitive process
meaning there are many miners located in different locations across the world in
which everyone has invested computational resources to perform the activity of
validating Bitcoin transactions. This process involves solving complex
mathematical cryptographic puzzles, and the one who succeeds in getting the answer is
rewarded some amount of bitcoins for the job that has been done. For
the miner to get a reward, needs to submit a proof-of-work to confirm the
task. This is how bitcoins are released from the chain.
Who are miners?
A Miner is anyone who has
invested the computational resources necessary to perform Bitcoin mining
activities. Even, if you can become a miner, you just have to know the
requirements needed to accomplish the task.
How to Own Bitcoins?
To own bitcoins you have to
buy through exchanges. The best cryptocurrency exchange I recommend to you
is Binance. Create an account, deposit money, and buy the cryptocurrencies you desire.
As you do in traditional
transactions you can do the same in cryptocurrency. You can buy and sell
cryptocurrencies. You can exchange one cryptocurrency for another, you can
exchange fiat currency vs cryptocurrency, and you can buy products and services using cryptocurrencies.
The difference between
traditional transactions and cryptocurrency is that in the crypto industry, everything is done online and with no involvement of any middleman such as
banks and government.
In the crypto industry, you
become your own bank. You have full power and control of your own money. No
one can know how much you have in your wallet unless you decide to share your
private key with others.
Mindset Tip
"Every new paradigm is created from someone's mind, Satoshi Nakamoto created Bitcoin
Blockchain in his mind first through imagination then in reality. You can create anything
you desire in your life "
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