Decoding Cryptocurrency into Layman’s Terms

Decoding Cryptocurrency into Layman’s Terms

Decoding Cryptocurrency into Layman’s Terms : Cryptocurrency is no longer a buzzword – it has been around since about 2010. However, not enough people understand what it is and why it could be a significant disruptive influence over the next 10 years. When people hear the word “blockchain”, their eyes glaze over. They stare off into space, pretending to know and hoping the subject changes rather sooner than later as they feel completely out of their depth.

Decoding Cryptocurrency into Layman’s Terms

With the world’s total value now for all crypto being over 3 Trillion US Dollars, it looks like crypto is here to stay.

Governments are increasingly authoritarian. Recently, the Canadian government has frozen citizen bank accounts, which would be impossible in cryptocurrency.   Crypto remains outside of the control of any government, central banks and even the Federal Reserve.

Let’s unpack crypto to have a basic understanding of what it is and how it works.

What is Cryptocurrency?

Cryptocurrency is a virtual or digital currency that works on blockchain technology. It is a peer to peer electronic cash system.

It is designed as a medium to operate online to buy goods and services and make payments.

It is similar to other payment platforms with a few critical differences.

• It is decentralized
• It is free from any third party interference. It is not controlled and regulated by any government or central bank system.
• Crypto transfers attract either no or meagre transaction fees
• There is no limit for making transactions
• You have 24.7 access to your money with no delay in transactions
• No paperwork is required

What is Blockchain Technology?

The current banking payment system requires a middleman (the banks) to effect transactions between the person sending and receiving the money. This is a centralized and highly regulated system.

Blockchain technology facilitates the transfer of digital currency directly between parties with no middleman.

Blockchain is a set of blocks that record transaction information in digital ledger form. Every transaction is stored on every node throughout the blockchain network.

This makes it impossible to change, hack or cheat the system. Furthermore, every single transaction is verified by all nodes.

All data is encrypted and unencrypted continuously, making it secure.

What is Crypto Mining, and Where Does it Fit in?

Let’s take a look at Bitcoin as an example of a cryptocurrency. People trade in this digital currency called Bitcoin.

Where do these Bitcoins come from? That is the right question!

The “nodes” or “blocks” referred to above consist of computers responsible for verifying all transactions taking place on the network.

In addition to this, they are also responsible for producing the currency of Bitcoin itself. They do this by spending a lot of time and energy solving incredibly complex problems.

This work is referred to as “mining” and describes the work being done.

Once they have solved the problem, they are rewarded with a Bitcoin. This is how bitcoins are introduced into the system.

The miner can then sell the Bitcoin through a cryptocurrency exchange. Bitcoins can be traded for other cryptocurrencies or even cashed out in Dollars and sent to the miner’s traditional bank account.

In Summary

Cryptocurrency is revolutionizing finance and banking worldwide.

Anyone with access to the internet can trade, spend and borrow internationally using cryptocurrency.

Crypto is better, faster and more secure than physical money.

Some vast players with vested interests in the current system show fierce resistance to crypto.

However, many people believe that crypto or some form of crypto presents a real future for change in the world economy.