Cryptocurrency meaning
Cryptocurrency is a virtual or digital currency that is secured by cryptography. The cryptocurrency was stated by a pseudonymous developer named Satasho Nakamoto.
What is Cryptography?
Cryptography comes from the Greek word ‘kryptos’ which means hidden. Kaspersky defines cryptography as the study of communication techniques that allow ONLY the sender and intended recipient of a message to view it content.
Cryptography makes it impossible to counterfeit or double-spend cryptocurrency.
Cryptocurrency does need central monetary or authority such as government or bank. According to coinbase cryptocurrencies are managed by peer-to-peer networks of a computer running free or in open-source software. Anyone who wants to participate can.
Even though cryptocurrencies have no banks or government involved they are secure since all transactions are vetted and controlled by blockchain technology. Blockchain is similar to a bank’s ledger.
Blockchain is a set of blocks that record information of the transaction. Blockchain record things like who made the transaction and to whom, the amount of trade-in form of a digital ledger that is distributed across the network.
This means the data is replicated and stored in each node across the entire blockchain network making it more secure and impossible to hack or cheat the system
Bitcoin was the first cryptocurrency. Bitcoin was started in 2008. According to coinbase Bitcoin is by far the most influential and widely known form of cryptocurrency.
Other types of cryptocurrency include;
- Ethereum
- Litecoing
- Bitcoin cash
- Bitcoin coin
- Tezos Eos
- Zcash
Cryptocurrency is used widely with $7 trillion worth of bitcoin has been transferred since 2009.
How to protect your cryptocurrency
You can lose your cryptocurrency by loss, theft, loss of access key, and other ways. You need to protect your crypto from theft and loss just like you do with other forms of currency. Most people find it secure to keep their crypto in a secure exchange like coinbase. You can also keep your cryptocurrency secure using cold storage. Cold storage is one of the methods that most secure. Cold storage is an offline wallet. It is the highest level of crypto protection. Here, crypto tokens are held offline.
How to invest in cryptocurrency
There are several ways to invest in cryptocurrency. You can buy it with fiat currency (like US dollars), or you can trade other cryptocurrencies for it. You can buy Bitcoin and Ethereum directly with your credit card or bank account on exchanges like Coinbase, Gemini, and Bitstamp.
To invest in cryptocurrency is just like the way one invests in other currency. For crypto, one needs to create an account with an exchange like coinbase. From there use real currency to buy cryptocurrency. To buy crytocurrency use CashApp an online app which holds the currency.
A website like CoinMarketCap can help you to find the most popular cryptocurrencies. Then, invest in them by buying into a crypto ETF or index fund.
What makes cryptocurrency different?
There is no limit in making a transaction with cryptocurrency.
Cryptocurrency charges a very low or no transaction cost. Additionally, there are no extra charges when making an international transaction.
Anyone can use cryptocurrency without any paperwork. This is what makes cryptocurrency different from other forms of currency.
What do Warren Buffet, Charlie Munger and, Bill Gates thinks about cryptocurrency?
On CNBC interview Charlie Munger said,
“Bitcoin is like a rat poison.”
“Bitcoin is like a rat poison squared.” Warrren Buffet
Warren Buffet Bitcoin as a non-productive asset, he said bitcoin is an asset that creates nothing and it depends on the excitement of the next buyer.
Warren Buffet added that bitcoin is a genius and blockchain is important but bitcoin has no unique value at all. It doesn’t produce anything, you can stare at it all day, and nothing will come out of it, it is delusional.
Charlie Munger said bitcoin is worthless artificial gold.
Bill Gates. “It is a crazier speculative thing, where it is not an asset, it is not producing anything and you don’t expect it to go up in value. It is pure fool theory type of investment.”
What do you think about cryptocurrency?