Introduction to cryptocurrency -The Nation

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It has been over 10 years since the inception of cryptocurrency, but it only broke through to mainstream consciousness in 2017 as prices surged.

Cryptocurrencies facilitate payments and other pieces of information—between people, without the oversight of a central body (like any government or State Bank). In the past, many people had tried to create digital cash before, but all had failed—until Bitcoin was launched in 2008.

So what’s so “crypto” about it? After the financial crisis of 2008, there was a disturbance when it came to the almighty trust in banks and financial institutes; the need became the reason for the birth of Bitcoin; a currency with no outside interference or centralisation unlike any other form of monetary presence ever before.

Bitcoin runs across a distributed network of computers—as opposed to a centralised set of servers, like those used by traditional banks. All transactions are recorded on an immutable ledger which is impossible to alter or change, which goes by the technical name as “blockchain”, as the name suggests; blocks of information creating a series or chain of this entire system.

You’ll also hear the words ‘coins’ and ‘tokens’ in the blockchain world. These aren’t the tokens you might use at an arcade game or bubble stands. Rather, these tokens are digital assets that exist on the blockchain and can operate as anything from a currency to a digital good or service.

Now the question arises, “All the options aside, are cryptocurrencies a worthwhile investment in the 21st century?”

The answer lies in the details of it and of course it depends upon your investment goals, time period, risk tolerance, market conditions and stage of that particular crypto asset. At the moment there are 12,225 crypto currencies or “Alternate Coins” currently in trading. After the development of Bitcoin, every other coin or asset such as Ethereum, Litecoin, XRP, BNB etc are known as “Alternate” or “Alt” coins.

Since the trading is purely transparent on the digital exchanges, free from outside influence, the prices are prone to extreme swings or “volatility” which makes it highly risky for the novice traders.

As the passage of time and robust influence of technology over time; buying and selling of cryptocurrency are made relatively easy over the digital exchanges such as Binance, Coinbase, KuCoin etc. As the trading is made easier, people can also swap or convert them into relevant FIAT currencies.

The most important thing to know is that owning crypto comes down to owning public and private keys. A public key’s like an email address: you share it to send and receive funds (or emails). And just as you’d never share your email password you should never share your private key; that’s what allows you to actually access your funds or crypto assets.

Leaving your funds on a crypto exchange is relatively risky unless you are securing it additional methods such as 2F Authentication, SMS or by Facial verifications; you are effectively entrusting your private key to the exchange, and if anything goes dodgy, you’ll be kissing them goodbye that’s where the unregulated part comes into play. From a security standpoint, though, it is better practice to transfer your funds to a digital storage or commonly known as “wallet”—where you can store and manage your crypto. In other words, a wallet lets you take that private key into your own hands for safekeeping. Wallets also come in different shapes and sizes: some will have support for just one crypto currency while others will be compatible with several, alongside a variety of other services.