Here are some burning questions we all ask
What is Crypto currency? Is this the global currency of the future ? Are Elon Musk and Chamath Palihapitiya the poster child of crypto currency? What is block chain? Is this the currency of dark web ? Can my cryptocurrency wallet be hacked? Why dose the value fluctuate in cryptocurrency? Who is Satoshi Nakamoto? Which crypto currency to buy?
Have I missed any question?
Well, here are the answers to many of these questions in a nutshell…
Cryptocurrency is a digital currency which functions through cryptic technology and is exchanged via the internet and stored in servers. Still with me? Good.
It is a digital ( 101010…. lots of it) code with a public and private key which creates a unique digital signature every time we transact.
Now let’s make it easier to understand. If you purchase an ice cream for LKR300/- via a debit or credit card, what happens? The vendor swipes the card to check with the bank to see if you’re good for the money. Let’s assume you had a balance of LKR 1000. The bank gives the green light to honor the payment and adjusts its banking ledger with a debit of LKR 300/- to your account leaving you with a credit value of LKR 700.
It’s the same process with cryptocurrency but with a major twist to the ledger-keeping process. In a crypto currency transaction the ledger is updated to all servers connected to the network which creates a higher level of authenticity and transparency which, in turn, prevents double spending. A record is kept not by one central authority but by the peer-to-peer network involved in the process This decentralizes the system. So, it’s not regulated by one authority but a network of independent bodies which share the same ledger and authenticates the payment.
This is called Block Chain technology , Blockchain is not limited only to cryptocurrency but is used and can be used on varied instruments.
For instance, just as you go to a casino and exchange money for chips or tokens, you can buy cryptocurrency or consider them as online tokens. You store your cryptocurrency in a desktop, digital and hardware wallet. An account can be created with the cryptocurrency wallet providers. However, their privacy terms, ease of use and fees might differ. Accessing your digital currency is with a “private key” or cold wallet, which is a USB drive-like device. It is important to note that the private key is vital in accessing your crypto wallet and you are, in fact, responsible for your asset. This can be a double edged sword since there’s no tech support team or regulatory body.
Losing your Private Key = Losing your cryptocurrency
So, how does cryptocurrency qualify as a medium of exchange?
So then cryptocurrency is MONEY 2.0 and the cherry on top is that it’s decentralized. We the people, for the people- no government, agency or service provider is needed. For example, let’s say we trade in Bitcoin, the poster child of Crypto Currency. Thanks to the medium of exchange the farmer in Sri Lanka will be paid the same amount as a farmer in Finland for the same farm produce. So, the value of goods will be the same in every corner of the world. This is revolutionary. In addition, the currency exchange risk is mitigated and banking fees can be made obsolete since transactions take place from peer-to-peer.
The future is here. But like anything in life, it’s not free from duality; the Yin and Yang of life, as some may call it.
Here are some issues that arise with cryptocurrency:
- Crypto wallet accounts can be hacked – High volatility in value retention
- Transaction processing time
- Which cryptocurrency to buy?
- Data security and privacy issues related to IP addresses and user tracking ?
Of the above, privacy, data security and value retention are the three most concerning road blocks for this new revolutionary open-source technology. Let’s hope people will not make investment decisions blindly thinking this the next GOLD RUSH or DOT.COM boom! In the unfortunate event of this happening, we are looking at the next catastrophic economic collapse in human history. Then crypto currency becomes humanity’s kryptonite .
I’m a scholar of this medium of exchange but by no means, an expert.
However, I am keen in learning more, and also welcome challenges to what I know with new knowledge about this revolution in money globally. Let us free ourselves from the fear of fear and embrace change with informed decision making.
Being quite optimistic about this technology, I hope this will be the global currency of value, which enriches lives and reduces financial uncertainty and promote equality , so that we can march towards the betterment of humanity.