What was your first thought the day you learned there is something called cryptocurrencies? Good guess is that you were wondering what that really means. It sounds pretty alien, right? Like kryptonite?
In this introductory lesson, I will be explaining in the simplest way possible what crypto currencies are. I hope I answer the questions on your mind about this relatively new technology that is already changing the world.
So, what are Cryptocurrencies?
To put it in an easy to grab terms, Cryptocurrencies are decentralized digital currencies which you can spend on items or services you use everyday.
For instance, you can buy airtime or data for your phone with cryptocurrency. You can also pay for electricity or your TV subscriptions with cryptocurrency. This can be done on our app, tatspace (available in certain countries, like Nigeria etc).
You can even use cryptocurrencies to make payments for several other services rendered to you by anyone anywhere in the world. I have used crypto to pay for a haircut and other things. Some people have bought pizza with tatcoin or bitcoin in the past.
With cryptocurrencies, you can equally send your family and friends money with ease or receive same from them without trouble. It does not really matter which part of the world they live in.
Thus, you can see how simple this is: cryptocurrencies are simply digital money you can spend or send to others.
So, what then makes crypto special?
Why should we go for crypto currencies instead of the normal money in our bank accounts? I’m pretty sure you’re wondering about this too, right?
Well, I’ve got the answer you need!
Crypto Currencies are way more exciting than the money in your bank account which you can also send, spend or withdraw. Do you want to know why? Read on.
Do you know that the money you have in your bank app does not really belong to you? Are you aware of this?
Yes, your bank is holding the money for you, but they can do anything to it when they want! For this, they do not even need your permission.
Instead, you are the one who needs to ask for permission from them before you can send, spend or withdraw your money when you need it. If you are unlucky to need it when they are unavailable, you have to wait or look for other alternatives! You can attest to this!
For cryptocurrencies, there’s nothing like banks nor anyone holding your funds for you! Unless you really want that. You hold it yourself by simply downloading some free mobile or desktop applications. These applications lets you create your own wallets by yourself so you can access your funds freely.
This makes you the boss over your own money! Not some bank manager in one fancy office!
You do not even need to pay for bank fees anymore for keeping your money in your own wallet. You are also free to spend the money anytime you want to.
There’s a saying that cryptocurrencies don’t sleep. That’s true. You can access your funds anytime of the day. Whereas banks do not work on weekends and can always have network issues when they do.
Isn’t this interesting?
Now, here’s another important question people ask:
Why is it called CRYPTOCURRENCY?
They should have called it better money, right? Since it is better than the money in our bank accounts.
Well, there is a reason it is called CRYPTO-CURRENCY. You want to know?
The name ‘CryptoCurrency’ is a combination of two words. One is Cryptography, and the other is Currency.
I’m pretty sure you already know what currency is: money that can be spent (in simplest terms!). But what is Cryptography?
Cryptography refers to the way this digital money in your control can be kept secured. Like a way to prevent people from cheating you or others.
This technology uses some advanced form of mathematical calculations to provide Secure Encryptions for crypto currencies.
The goal is to prevent anyone else from spending your money before you do (like banks spend your money without your permission). It also makes it difficult for bad persons to spend their money or anyone’s money twice – like sending two different people $10 when all they have is $10. This is called double spending.
Does this explanations sound so complicated for you?
If your answer is yes, then I can tell you not to worry about this. You do not really need to fully understand how this works for you to enjoy using crypto currencies! But we will explain this fully in another article.
The application software where you store your funds is programmed to take care of this behind the scene. All you have to do is press buttons: send, receive, pay etc. You are good as long as you input the right addresses (just like putting the correct bank account number when using banks).
So, do you think crypto currencies are better than fiat currencies? Fiat currencies are those money issued by a country’s government. That is the money in your bank account. Example is the Dollar, Pound, Naira, Pesos, etc.
I think they are in many ways.
Here are 4 key points that highlight the importance of cryptocurrencies over fiat currencies.
1. Cryptocurrencies are ACCESSIBLE to everyone
You do not need some form of personal ID to gain access to a crypto wallet. You do not even need to meet anyone or go to any location to get it started for you.
As long as you have access to the internet, you have access to crypto currencies. Merely using your mobile smart phone or computer grants you access.
For fiat, so many people in the world do not own accounts in banks because they keep getting turned away for one reason or the other. If not for cash, a lot of people in the world will not have access to money!
Thus, as the world is getting fully digitalized, Cryptocurrencies offer a better solution that makes money accessible to everyone no matter where or who they are.
2. Cryptocurrencies are PERMISSIONLESS
This simply means that you do not need permission from anyone to start using crypto currencies. Imagine that it is hard to open a bank account if you do not have a form of ID. This is not the case with cryptocurrencies.
Also, no one can freeze your crypto wallet like they do with bank accounts. You are free to send, receive and spend ANY AMOUNT of your funds. You can do this at ANYTIME you want, with ANYONE you want, and ANYWHERE you or they are located. No one can stop your transaction from going through.
Normal banks have many limitations. Sometimes you can have so much money in the bank, but they will tell you that you can only send, spend or withdraw only part of it at a given time. They do not even care if you need most of it for something important or urgent.
Without their permission, you cannot withdraw your own hard-earned money!
Can you imagine that?
3. Cryptocurrencies are SECURE.
They are highly resistant to hacks and censorship.
Unless you are extremely careless, no one can steal your funds with ease. Fraudsters or the government cannot shut down your wallet without your permission. I’m sure you will not grant anyone such permission.
They cannot even ban crypto currencies. They will have to ban the internet first!
Do you know that the way banks store money they are easily robbed or have their system hacked? This is called single points of failure.
If not that central banks always prints more money to give them as bail outs when they lose money, I would consider banks the number one place to not ever save money!
Thanks for crypto currencies anyway. We don’t need banks in the future. Even today!
4. Crypto currencies are BORDERLESS!
They are cheaper and faster for sending funds across borders.
You can send money freely, and fast to any location in the world; and it’s nearly for free too!
The processes involved in sending or receiving money from other countries via the Bank is very tiring. With crypto, you can just do this with your phone or computer, in seconds.
There are some amounts of money they will not let you send across to another country where it’s needed for something important. If they do, it will take days to go through the processes involved to send such money. It will also be so expensive. To many middlemen to settle.
But with crypto currency, in seconds you’re done.
So, now you have seen why crypto currencies are so much better. There are even many other points, but we will take this in upcoming lessons.
Thus far, I have explained crypto currencies in a simple way anyone can understand. In next lesson, I will explain the basics about Bitcoin and the technology that powers it and all other crypto currencies! Make a guess?
Yes, that’s right: the Blockchain.
