From Fiat To Digital Currency: A Brief Introduction Of Cryptocurrency
Since the inception of the first digital currency in 2009, cryptocurrency has created an industry worth hundreds of billions of dollars and ushered a new wave of innovation in the distributed system, cryptography, the social system and economics.
For many with little knowledge about what these currencies are, we see them as nothing more than a term of abstraction, a word used by some “digital know all”. We sometimes get lost around the whole concept as a whole, even when we sign up for paid classes; not to worry, no one gets it the first try, except you have an IQ of 160 and above. It’s also known as electronic money, a form of digital currency.
In ancient times, man relied on trade by barter. Bartering was common among the populace; then, Man moved from bartering to cowry system (shell money) — it took a slow pace to get it right and determine each cowrie value — before moving to fiat (paper money), and gradually to cryptocurrency. Following man’s trend and evolution of these human technologies and social systems, you would realize that all forms of exchange create independence, wealth appreciation, and power control.
The success of all previous currencies was the government’s involvement and their enforcement as the legal tender. With the growing leach of corruption in the government system and even worse in African countries, people have now discovered a better means of exchanging value without an intermediary based on blockchain evolution. These cryptocurrencies are outputs of the blockchain, whereby platforms like Valor Exchange offer a fast and seamless trading experience. Her unique feature of trading is called Bidding (it is a sure way to retain value). The main challenges are regulatory, human resources, market Volatility and technological evolution; however, With a combination of prudence, clarity, and commitment, successful crypto leaders will enjoy the essential rewards of their hard work on time.
In our banking system, financial transactions are stored in the ledger used to track money flow through customers’ accounts. With the invention of blockchain technology, the tedious and daunting process of recording data in a centralized ledger has been solved.
In connection with the point previously mentioned, the blockchain acts as a secure network that allows people to store, exchange assets, and perform transactions without a third party — It is transparent, immutable, decentralized, secured, and free from external manipulation or threat. Quite fun, but how is that possible? Well, because of the block itself. Instead of a long series of records, chopped into smaller bits that can be referred to as Blocks. These blocks are joined together by a chain that is immutable and cannot be altered — Blockchain.
Strategically launched in 2009, Bitcoin (BTC) is the world’s first and most popular decentralized cryptocurrency, created by Satoshi Nakamoto and his true identity is yet to be confirmed. It follows a series of ideas first presented in a white paper published on October 31, 2008.
Bitcoin uses peer-to-peer technology to enable payments that don’t require a central authority to operate. The people who contribute to the Bitcoin network’s computing power, also known as “miners”, are stimulated by rewards and fees for transactions paid in Bitcoin.
Bitcoin transactions are verified by a cryptographically labelled network, providing information and communication using codes. Only those intended as information can read and process it — and recorded in a publicly distributed ledger called the blockchain. Moreso, Bitcoin account for over 60% of the total volume of the overall cryptocurrency market capitalization.
Altcoins are cryptocurrencies introduced after the success of Bitcoin. Altcoin is a combination of “Alt” and “Coin”, are alternatives to Bitcoin. They are popularly called “Alt” among crypto users. Several “cryptopreneurs” believe in Bitcoin’s success as the first digital partner. Altcoins are built on Blockchain basic framework. These alternative coins must have a competitive advantage to be successful compared to Bitcoin. Examples include:
Ethereum; an altcoin used to creating a smart contract
Tether is a stable cryptocurrency pegged to the same value as the US dollars
Dogecoin is designed to be a friendly cryptocurrency that could reach users that are put off by the complexities of Bitcoin.
And lots more.
According to CoinMarketCap, Altcoins accounted for more than 34% of the total cryptocurrency market as of February 2020.
Unlike fiat currencies, cryptocurrencies are stored in a wallet. A wallet provides users with a digital solution for securely receiving and transferring cryptocurrency assets. It can support a single-cryptocurrency or provide multi-cryptocurrency solutions. This solution ensures that the owners of cryptocurrencies and blockchain assets are the only entities with access to funds (through their private keys). A user can create a wallet from smart mobile devices, web or through hardware.
Overall, cryptocurrency offers a unique solution that eliminates the need for fiat currency. This digital currency allows people to become their own banks and payment method. The determining factor in whether crypto replaces cash is consumer acceptance. However, many argued that cryptocurrencies still has a long way to go before replacing today’s form of money and becoming globally acceptable. Well, like the novel from one of New York Times bestselling author, Jeffrey Archer, “Only time will tell”, when the rest of the world is ready to accept cryptocurrencies as the everyday means of payment, integrated into our lives; the world will look very different in a way that only we can understand.