What is cryptocurrency?
What is cryptocurrency? A
cryptocurrency is a digital asset or currency, that is an alternative way of borderless payment
created using cryptography algorithms. The use of encrypted technologies means
that cryptocurrencies function both as a currency and as a virtual asset.
To
use cryptocurrencies, you need a cryptocurrency wallet like Metamask, Trust
wallet etc. Or exchange Binance, OKC,
Kucoin etc. This wallets/exchange can be software that is a cloud-based system
or is stored on your computer or on your mobile device. The wallets are the
tool through which you store your encrypted keys phrases that confirm your
identity and link to your assets.
your
encrypted keys phrases that confirm your identity
and link to your assets.
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What are the benefits of cryptocurrency?
·
Security:- No one can access your wallet unless you give someone access to
your private keys for your wallet. However, if you lose your private keys there
is no way you can recover your funds.
·
Privacy:- since you did not register like tradition financial institution
with documents and paperwork, you can maintain transaction level of privacy. On
the transaction there is identifier on the blockchain your wallet address but
it did not include personal information about you.
·
Transparency:- All transaction take place is publicly distributed blockchain
ledger. You can check any transaction on blockchain explorer. You can see
transaction amount from wallet address to wallet address, anyone can see the
amount of crypto stored in a wallet but there is no personal information.
·
Accessibility:- anyone can use cryptocurrency, all needed is smartphone or
computer with network connection. The opening of cryptocurrency wallet is very
simple compared to opening of bank account at a traditional financial
institution.
·
Transaction
fee:- transaction fee is relatively low
using cryptocurrency compared to the financial service (Bank, wires).
·
Transaction
Speed:- you can send a money all over the
world with high speed with cryptocurrency in a minutes once the blocks verify your
transactions rather than using bank that will tale 2-7 days.
·
Inflation
Protection:- people se Bitcoin
and other cryptocurrencies as offering protection against inflation. Bitcoin has a had cap on the total number of
supply that will ever be minted. The price of Bitcoin ought to increase. But paper
notes has no maximum supplies.
·
Decentralization:- meaning it is not under control of government or financial
institution.
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What
are the risks of cryptocurrency?
What
are the risks to behind using cryptocurrency? Cryptocurrencies are still
relatively new system, the market for these digital currencies is very
volatile. Since cryptocurrencies don't need banks or other third party to
regulate them; they tend to be uninsured and are hard to convert into a form of
tangible currency (such as NGN, US dollars or euros.) In addition, since
cryptocurrencies are technology-based intangible assets, they are hardly hacked
like any other intangible technology asset. Finally, since you store your
cryptocurrencies in a digital wallet, if you lose your wallet private keys (wallet
backups), you have lost your entire cryptocurrency funds.
While sending Bitcoin or any other
cryptocurrencies you have
to be very sure and careful since if you send it to wrong wallet address you
may loss the fund for ever.
Also Read: Top Ten (10) Richest Cryptocurrency Investors
Follow
these tips to protect your cryptocurrencies:
Look before you leap! Before
getting to invest in a crypto space, make sure you understand how it works, where
it can be used, how to exchange it.
Use a trustworthy wallet
or exchanges. You have to do some research on your part to choose the right
wallet or exchange for your needs. If you choose to manage your cryptocurrency
wallet or exchanges with a local application on your computer or smartphone
device, then you will need to protect this wallet at a level consistent with
your funds. Just like you wouldn't carry a millions dollars around in a paper
bag walking any how, don't choose an unknown or lesser-known wallet or exchange
to protect your funds. You want to make sure that you use a trustworthy wallet
and exchanges.
Have a backup strategy. Think about what will happens if your computer or smartphone device or wherever you store your private keys is lost or get stolen or if you don't have access to it. Without you backup your private keys somewhere, you will have no other way of getting your cryptocurrency back to you, and you could lose your funds.