Pre-pandemic we saw the price of Bitcoin rise to well over $27k and made a good number of people millionaires. It was from then on, that eyes started turning to understand what this weird new internet money can do for them. The pandemic however brought some education with it--or should I say enlightenment. Since a lot can happen when you're at home, broke and bored, with a lot of internet on your hands.
Truthfully if there is one good thing sister 'rona did, it is that she made everyone accelerate towards embracing new ways to make money and pivot into living a life in the digital world. With Google search for crypto related terms growing by 89.4% compared to 2019, it's no news everyone got curious as to what crypto is all about anyway.
What is crypto?
Cryptocurrency is digital money built on what is called the blockchain through complex math known as cryptography. The blockchain is where cryptocurrencies amongst other things, are developed. They're like labs that everyone and anyone can have access to.
Since you can create anything from Aspirin to Nuclear weapons in a lab, that's how the blockchain has many applications to it. From building internal networks to track how files are sent in your company, to saying "fuck it, I'm turning a meme to a coin", giving rise to things like Dogecoin and Shiba Inu.
Cryptocurrency is similar to regular money and different from it as well in three ways:
Similarities:
has a value against the dollar (all cryptocurrency is measured against the dollar, 1BTC = $60,000 USD)
it is an acceptable form of payment (some websites, schools, businesses and a few countries accept cryptocurrency as a form of payment)
can be traded like FX (Crypto allows people to trade it like how the exchange markets trade various currencies in order to make a profit)
Differences:
is not run by a single body (when something is being monitored and observed by several bodies, in order to ensure everything is free and fair for all, it is said to be decentralized. That is, power doesn't reside in one place and whatever you do in Jamaica can be seen in North Korea. This allows for fairness, therefore nobody can cheat another or lie about transactions. What you see is what you get).
it is built on the blockchain
it's in two forms (crypto has two parts; coins and tokens. Coins are already established forms of digital money with their own blockchain. Meanwhile tokens don’t have a blockchain, they borrow from that of an existing coin. Tokens can only become coins when they develop their own blockchain, meaning they’d have to use their own lab not someone else’s).
Now cryptocurrency is called a digital asset. Because money is an asset. You should also be aware that other things like real estate, fancy pieces of art, rare collectibles, one-of-a-kind shoes, and quite a number of other stuff are regarded as assets. Hell, if you still own an original Nokia 3310, I can tell you that you're sleeping on your next Benzo right there!
Just the same way you can build/create physical assets, that's also how you can build/create, buy, sell and even flip digital assets for a profit. Most common digital assets now are NFTs and wearables but I won't be getting into those. Till another time. The awareness needed here is that whatever real world asset you can think of, a digital version may exist or is currently being built on the blockchain.
So how do we store these digital assets?
Assets have value, which means there's a price tag on it. For cryptocurrency, we measure the value of an asset with respect to the dollar. So if you have an asset worth 1ETH, and the value of 1ETH on the market at that time is $3,000 then your asset is worth $3,000. Now assets are traded on exchanges, that's how their value is determined--based on demand and supply. Similar to the way banks do with currency where they are traded, bought and sold based on demand and supply, with the purpose of landing a profit. Therefore, for clarity take a look at these:
Exchange (you can buy, sell or trade crypto here) = Bank
Wallet (where you keep all your crypto) = Bank Account
Address (the identification tag for your wallet) = Account number
Finally, after all that’s been said, what are the key takeaways from this?
Cryptocurrency is a digital asset, it is digital money with real uses like buying, selling and making payments.
Digital assets are built on decentralized platforms called blockchains.
Decentralization is a situation where everyone decides what's best for the collective, everyone can see what everyone does and is notified of any changes. Power is shared equally, 1:1.
Blockchains are construction sites for decentralized platforms, where you can build anything from office file trackers to ground breaking cryptocurrencies.
Always buy cryptocurrency with spare money. Someone with 1BTC living under a bridge is still homeless.
I do hope you have a better understanding of what crypto is, how it is built and what it takes to have a digital asset.
Awesome read
Good intro