Cryptocurrencies 101: A Short Introduction to Digital Currencies

So, we all know money right? Yeh, we all use it. It pretty much runs the world these days.

You might also be knowledgeable of the fact that money has a history, you know, how we started bartering item for item based on the value we placed on them, how from there we went on to tying value to certain resources like gold and silver which then became stores of value that we’d use to trade or signify wealth.

We then eventually got to the point where governments started to produce their own currencies which were tied to gold, with each governments currency having a different value. Then we got to where we are today, money not really tied to anything, money that governments can just print on demand.

I am not a money expert that’s for sure but I know enough to get me by and for a full history on money you can take a look at this brief article on the Britannica website. There’s a video you can watch there if you prefer to consume content that way.

In this article, I would like to introduce you to a new kind of money, a new, but really not so new kind of digital currency that has been taking the world by storm of late. Adoption is still low, but the adoption rate grows every single day. By reading this article, you could literally end up being one of those who start to subscribe to the “ways of the crypto”.

Just a short disclaimer: I AM NOT A FINANCIAL ADVISOR. All I am trying to do is teach you what I know about this new form of money that has peaked my interest and maybe might even peak yours. Ultimately, learn to do your own research (DYOR).

So I am relatively new to cryptocurrency. I’ve heard about it over the years but I think earlier on the barrier to entry was stiff and when it eventually got easier to get into, I was still quite ignorant (this realization makes me feel like  a sucker because I literally could’ve been a millionaire now if I let my liking of things overpower my scepticism). Now, all of a sudden, as if it were some revelation, I am really starting to get fascinated by this new form of money/value.

What is Cryptocurrency?

“Cryptocurrency, often called “crypto,” is any type of decentralized, digital currency that’s based on cryptography. “- SoFi.com

“Cryptocurrency is a new kind of internet money. You can use it to buy things online, and you can send it instantly to other users anywhere in the world, at very low cost, needing nothing more than a smartphone and an internet connection.”- LearnCrypto.com

In layman’s terms, cryptocurrency is a form of digital money. This money is decentralized.

Let’s explain decentralization:

Decentralized means that cryptocurrency isn’t issued by a central authority like a government or bank, like the money we have all grown to know (also referred to as “fiat currency”. Rather, cryptocurrencies are created, exchanged, and overseen by a distributed peer-to-peer network. At least not until government digital currencies become a big thing.

To dive a little deeper, these digital assets are created using computer networking software that enables secure trading and ownership. The term “crypto” or “cryptocurrency” comes from the mathematical technique used to secure each unit of cryptocurrencies and ensure it can’t be copied. It helps guard against fraud basically.

If all this is confusing so far, just remember that crypto is digital money that is made and exchanged independent of banks and government etc. In essence, with proper decentralization, your money is yours and the banks and governments can’t freeze your assets. But there is more to it though. Here, I just want to keep things simple.

Let’s talk blockchains😅

Another term or technology you need to be familiar with is blockchain.

A blockchain is a way to store data. Rather than centralising information, and the control over it, in one place (like in a database), blockchains store it across a network where no one point has the authority to change records. Cool huh?

Blockchain’s record data – in blocks – and securely store this data by chaining those blocks together using cryptography, hence a block-chain. In essence blockchain technologies maintain a tamper-resistant record of transactions and keep track of who owns what.

But enough with the jargon, lets move on.

It all started with a Bitcoin🤑

It all started with the blockchain technology called Bitcoin? Heard of it?

Bitcoin, was supposed to be a new from of money, a store of value that would meet the requirements that made money what it is, or at least should be. Bitcoin was to be; scarce, durable, portable, divisible and fungible.

Just as a side-note: Bitcoin (with capital B) refers to its money system – whereas bitcoin (lowercase b) refers to its units – the money itself.

Bitcoin was launched in 2009 and was then at the time worth very little. It wasn’t until 2010, when someone paid 10,000 BTC for a couple of pizzas, that bitcoin began to give signs that it could be used as money. If that person kept that bitcoin, they would be a mega-millionaire today. Today it is worth give or take USD40k per bitcoin.

Anyway, from there, other cryptocurrencies (or rather “alt coins”) and tokens were created and are still being created that serve as money, store of value, utility etc. Heck, we even have “meme-coins” now.

How can it be used?

Crypto can be used for many things. You have crypto that you can use to make transactions like bitcoin, ether and Litecoin. Some are used for governance, utility and some can be like shares.

Basically when you buy some tokens or coins you buy into their currency, technology or their organization, kind of like what you would do when you buy stock. You can sell stock, you can buy stock, you can grow it etc. Same stuff with crypto.

There is of cause a lot more you can do but that is just a summary.

Where can you get crypto?

Also another question that needs its own article. But, the most common place to get crypto is by buying some on a crypto exchange.

There are many, some of the most common being Kraken, Coinbase and Binance. They all have different requirements and offer different things so you’d have to do some research on which one best suits you.

I also recommend you have a non-custodial wallet. This is a digital wallet that only you own. No-one has access to it unless you give it to them. Governments cannot shut it down. Most exchanges are centralized so if they felt like it or if the government demanded it, they could freeze your assets. So it’s wiser to be as decentralized as possible, meaning, trade on an exchange but keep your money in a decentralized, non-custodial wallet.

Wallets are free and can be hardware (not free) or software. Just don’t lose your password otherwise you will lose access to all your money.

Exchanges are also free.

I have about 3 wallets. Each serve their own purpose.

Also, not all exchanges will have all crypto, and not all wallets will hold all crypto so choose wisely. Some wallets I recommend are Exodus wallet and Trust wallet.

If you want to buy and sell low-key, then look into decentralized exchanges or peer-to-peer exchanges. There are not too many though.

Last points

• Can you get rich with crypto? Yes. But it is not as easy as people think. You can either look at making money fast via trading or invest in the long-term via holding your crypto until they gain value.
• Is crypto a scam? No! But there are many scammers out there trying to rip you off, so learn to find reputable sources for information, do your own research and trust few people. Be suspicious of even your family hehe.
• Where to start? Learn about crypto first. Check out learncrypto.com. From there choose a good exchange. I tried a couple, and settled with Kraken. Get a wallet or two or three. Research on viable tokens and coins and keep growing.
• Some crypto too look into? Maybe start with the obvious coins like bitcoin, ether, Litecoin etc. But research about others based on the problems they aim to solve, the teams behind them, trading volume, etc. You can look into Solana, Terra Luna, Polkadot and many more. There are 1000’s out there but few are worth your time. Try and diversify your portfolio with big, medium and small coins and tokens.

There is of cause a lot more to cover when it comes to the world of crypto so you’ll need to take your time. I will cover as much as I can as I learn in the form of videos and articles. You can also follow me on Twitter and see the info I share there. For now, let this information sink in.

If you have any questions, feel free to hit me up in the comments bellow or on Twitter 😃

See you in the next article.