What is a cryptocurrency? What’s the buzz about bitcoin going around? Was dogecoin really a meme currency? Why does Elon Musk slip so much into crypto news? There are too many questions to address but let’s start with the basics of cryptocurrency.
What is cryptocurrency?
Simply put cryptocurrency is a digital currency or a virtual currency that can be used as a medium of exchange for goods and services. It’s not operated by banks or any central authority, and hence it is also a decentralized currency system. Instead, these currencies trade across a network of computers. However, cryptocurrencies can be purchased and sold, and stored in crypto wallets like a bitcoin wallet.
How does it work?
One word. Blockchain. Every cryptocurrency has its own blockchain. A blockchain is a shared database where all transactions for a particular cryptocurrency is stored. A blockchain is exactly how it sounds. It is a chain of blocks. Each block has the information stored of the recipient, sender, and transaction details. Once a block is filled, the new set of information fills up a new block. The crucial point to note is that each block is linked by a reference number and hash of the previous block. So if anybody tries to alter a single block the whole blockchain collapses. Hence cryptocurrencies are considered safe to invest in.
How many cryptocurrencies are there?
4000+ cryptocurrencies are evolving around the world. Even today new currencies are launching and revamping. Bitcoin is a very popular currency and is considered to be the first and original cryptocurrency. Nobody confidently knows who invented bitcoin but the name “Satoshi Nakamoto”, (associated with a person or group of people) is believed to have launched bitcoin in the year 2009.
What’s with Elon Musk and dogecoin memes?
At first, Dogecoin was built as a joke. The doge dog meme became the face for this coin just for the logo’s sake. Since it was only made for fun it’s only purpose was to give tips to content creators on Reddit for their art, memes, and posts. 2nd April 2019, Elon Musk tweeted, “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” When asked as to why Musk likes to invest in doge all we could learn was “I love dogs and memes”.
Is crypto trading beneficial?
There are major benefits crypto payment systems offer, some of them are low to zero cost transactional fees. Money can be transferred within the matters of minutes or seconds without any delay as cryptocurrencies are decentralized. Meaning there are no third trusted parties involved in the transaction. Hence lowering the chances of delay in payments.
Lastly, cryptocurrencies are now coming into games, online arts, and digital assets in the form of NFTs. It is believed to be the coming future currency, so when your kids grow old let them know you had your “cryptos” right!