HomeBlockchainWhat is crypto-currency? Everything you need to know in 2021
What is crypto-currency? Everything you need to know in 2021
January 27, 2021
Cryptocurrency, shorthand crypto, refers to digital currencies or tokens that are secured by cryptography. It is akin to digital assets that represent certain rights, such as ownership towards a network, digital collectibles, spendable currency within the system, or even as a proof of ownership.
Bitcoin was first released on 3rd January 2009 by mysterious and pseudonymous Satoshi nekamoto. The identity of the person or persons who created the technology is still a mystery. There’s one big point about Bitcoin that I’d like to point out unlike flats currency Bitcoin is created, Distributed, treded, and stored with the use of a decentralized ledger system know as blockchein.
Bitcoin has been around since 2009 it was created that’s over one decade now. while there is some debate over who created the technology. Bitcoin price have grown so much
Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer.
People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people.
Every single transaction is recorded in a public list called the blockchain.
This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions.
What is the blockchain?
Blockchain is the key infrastructure that powers the whole crypto industry. Let’s see what problems blockchain is aiming to solve. Ever wonder why in this modern age we are still relying on paper based documents for important matters? Examples of these documents include physical copies of our passports, identification documents, and certifications.
That’s because we have yet to find a good way to make sure that information shown digitally is not tamper-proof, until the advent of blockchain. Blockchains basically ensure that the information depicted is accurate and that the data is not compromised.
Historically, it has been costly to prove ownership to an asset because of all the regulatory red tapes, middlemen, and processes involved in recording who owns what at a specific time. With blockchain, anyone can launch a network and distribute ownership of that network to millions of people globally with a fraction of the cost. This is a bit abstract but imagine owning a part of the Internet where value is accrued to the owners – this would be pretty impressive.
With cryptocurrencies, people can imbue ownership rights in the form of digital tokens that can be easily transferable. As such, multiple projects chose to fundraise globally, distribute tokens as rewards to early adopters, and as a token of commemoration. Thousands of tokens have been released since then. Even though most of them fell into oblivion, some of them managed to capture enough value that they are now worth billions of dollars.
Sand and receive!
To send and receive for example bitcoin, you’re going to need a bitcoin wallet. A bitcoin wallet is your very own wallet where you can store all your hard-earned bitcoin. bitcoin wallet works with every other wallet. With every bitcoin wallet comes a wallet address. You can send your wallet address to people and they, in turn, can send bitcoin to your wallet. With your very own wallet, you can send, receive, and store bitcoin. You can also see all transactions just like your online banking on these wallet.
You can also use bitcoin to buy things online from stores that accept it as a payment method. Ever since its invention, there have been more and more businesses that accept bitcoin as payment so go try your luck, and the store you’re looking at might accept bitcoin. Imagine the convenience of doing all your business transactions online using a safe and reliable wallet.
processing of a transaction!
Each transaction consists of three main parts: an input, an amount, and an output.Let’s say that you’re trying to send Bitcoin BTC to Me The inputrefers to the BTC address of the sender as well as a record of where these coins have been. In this case, it’s your wallet address and the record of the coins inside. The amount is how much BTC you’re trying to send to me. Lastly, the output is the address of the wallet receiving the BTC my wallet address.
If you wants to send me some BTC, you has to publish your intention to do so, and then the network will validate that transaction. The network first validates that you has enough BTC to send to me and then checks if you hasn’t already sent it to someone else. Once validated by the network, the transaction gets clumped into a block with other transactions and attached to the blockchain. Transactions that are added onto the blockchain then become tamperproof and irreversible because it means having to re-do transactions on the succeeding blocks.
The thing about bitcoin transactions is that although BTC is sent to and from bitcoin wallets, these “wallets” don’t actually store BTC. Instead, they hold bitcoin addresses—records of all your transactions. Bitcoin addresses look like 34-character long strings of letters and numbers, and are also known as your public key. This is the address that you share with people when you want to receive BTC. Each public key has its own corresponding private key—a string of 64 letters and numbers that you use to “sign” transactions.
Think of your public key as an email address and your private key as your password. Your email address is okay to share because that’s how people send emails to you, but you can’t share your password because then they’ll be able to read all your emails. Public and private keys are essentially the same, but instead of emails, it’s access to your BTC.
After inputting all the transaction details (the amount and my wallet address), you inputs your private key into the Bitcoin software to “sign” the transaction, which gives the green light to send the money. At this point, the transaction is up for validation by the network. The network will then check if the signature (private key) matches its corresponding public key. If it matches, the miners will validate the transaction. Once you and i get like three confirmations on the transaction, the data is added onto the blockchain, and i will be able to use his newly-acquired BTC however it pleases me. As a reward for validating the trade, miners are rewarded in BTC per block solved.
With the technology behind Bitcoin, you can think of your bitcoin address as a transparent safe—everyone can see what’s behind the safe, but only you can access it.
The speed of a transaction
The speed of a Bitcoin transactions vary, and it depends on several factors. It’s important to remember that alltransactions need to be verified by the miners on the blockchain. When the queue is overloaded, your transaction doesn’t always make the cut for the current block. Instead, your transaction is put on hold until the next block is assembled.
Another factor of long confirmation times is the size of Bitcoin blocks. Although there’s always the chance of block size being increased in the future, the current Bitcoin protocol limits blocks to a size of 1MB. This limits each block to a certain number of transactions. That, in turn, can slow down confirmation times and as a result, the entire Bitcoin network is slowed.
In some cases, the speed of your transaction boils down to the blockchain processor you’re using. for example bitGo, the most secure and successful blockchain processing service in the world.
Internal vs. external transactions
Transaction speeds may vary depending on the kind of transactions you’re making. For example, if you send BTC from one Exchenge wallet to another Binance to binance wallet. (internal transactions), the transaction is instant. However, if you’re sending BTC from a binance wallet to luno wallet (external), you need to have the transaction confirmed by the Bitcoin network. If you’re having trouble with external transfers, you can always check the bitcoin transaction status and see what to do from there. Platforms like binance can help you buy small amounts of bitcoin, making internal transactions effortless and inexpensive.
For their service in verifying your transactions, miners are rewarded with bitcoin transaction fees. These fees are calculated in different ways, depending on the platform you’re using.
These fees cover the miner fees that come alongside bitcoin transactions as well as the maintenance of the wallet’s infrastructure.
For internal transactions, sending BTC is free of charge for some platforms .
Trading cryptos or stocks isn’t easy. First of all, don’t day trade. Day trading is just another form of gambling. Day trading is for degenerates. I am into ‘swing trading’, which is essentially trading on the trend. If I buy a crypto, I could long it for two or three months or I may sell it in two or three weeks. When I buy a stock, I hold it for an average of six months, with the exception of one or two that I’m willing to hold for 5 or 10 years (Yes, I holding Tesla!). I love trading. It requires an element of hustling, discipline and calculations. Discipline is the one I struggle with, but I’ve made some strides as well. Anyone that tells you that trading is easy is full of it. Do the research, learn some technical analysis, listen to the experts, cross your fingers and hope for the best. Nothing is a sure thing in this world.
decisions in both of these markets. In a bear market, you should cautiously buy and sell the news quickly. Only buy it when it’s strongly in the ‘Red’. Don’t ever buy when it’s in the ‘Green’ during a bear market. In a bull market, you can hold or ‘hodl’ for a fair amount of time and keep buying the dips to accumulate more. However, when the price goes ‘parabolic’ during a bull market, find a good place to sell before it comes crashing down. Remember, you don’t want to sell too quickly, but you don’t have to always sell at the very top either. Profit is better than no profit. When you start dreaming of quitting your job and buying three or four houses, sell everything. Listen and follow the experts. Besides promoting ‘identity politics’ and the political agenda of the crazed radical left, Twitter also turns out to be a great place to get tips from expert crypto traders.
Why is cryptocurrency so popular today?
Bitcoin is increasingly being mentioned in the mainstream media after its price reached $57,000 at the time of writing in February 2021 with a valuation of roughly $1 triillion. Along with it, other crypto tokens also mimic similar price increases as more attention is being paid to the space. Bull runs have a way to capture people’s attention, attracting hordes of speculators into the field, feeding into a market frenzy.
There are several factors contributing to the rapid rise in price. One of them is the increasing accessibility to buy crypto assets, with Paypal announcing support for cryptocurrencies, combined with the rise of fintech apps that support crypto trading such as Robinhood, Square Cash and Etoro.
Another one is the institutional adoption of investing in Bitcoin as a hedge against the structural weaknesses of the US Dollar due to the loose monetary policies by the Federal Reserve. Some of the public companies that did that include Microstrategy and Square.
Is it good to invest in cryptocurrency?
Unlike common asset classes such as stocks and bonds, major cryptocurrencies like Bitcoin and Ethereum do not produce any cash flows. As such, it did not receive good remarks from value investors. Warren Buffet famously made public remarks referring to Bitcoin as ‘rat poison’.
Bitcoin actually has characteristics more akin to commodities such as Gold. The fact that it is the first fixed-supply digital asset in the world makes it a good store of value. Therefore Bitcoin is more appealing towards macro investors that are looking to hedge against the weakness of the US Dollar. Paul Tudor Jones, Druckenmiller, and Raoul Pal are some high-profile investors that have made positive remarks about Bitcoin.
Owning Ethereum in the meantime is like owning a portion of the new Internet. The hype surrounding Decentralised Finance (DeFi) applications built on Ethereum are not just smoke and mirrors. These DeFi applications have been seeing skyrocketing user numbers, attracting billions of dollars of capital, and seeing more brilliant builders go into the space. Currently there are no concrete methods on how to value these assets, but this is normal for a new asset class. Valuation methodologies will become more mature as these assets gain more adoption over time.
Investing in crypto now is similar to investing in Internet stocks back in the year 2000 – the possibilities are vast but the road ahead is still uncertain. As the analogy goes, humans have a tendency to overestimate the impact of technology in the short-term and underestimate its effect in the long run. We are still in the early innings of crypto revolutions and there will be lots of ups and downs before we see the mass population benefiting from this technology.
As such, please exercise caution when investing as crypto is still pretty much a high risk investment. The price can be very volatile and it is definitely not for the faint-hearted. For beginners, what you can do is to start learning more about the technology, its ethos and its use cases.
How to buy and invest in cryptocurrency?
There are various ways to buy and sell cryptocurrencies. In many countries, fintech applications such as Square Cash, Robinhood, Revolut, Coinbase, Gemini and binance are gaining significant traction.
There are currently over 424 cryptocurrency exchanges globally. If you have a specific coin or token in mind, you can search it up on CoinGecko on where to buy it under the markets tab.
Should you buy cryptocurrency?
If you are still here after the long read, it means that you are intrigued enough to learn more. You do not have to allocate a big portion of your wealth into crypto straightaway. You can start by investing a small amount, be excited about the technology, and try to use it.
Do be aware of the price volatility and the inherent risk of dabbling with new technology. Only invest money that you can afford to lose. We believe that the more you learn about crypto, the more you will be dazzled by the beauty of this creation.
Why is cryptocurrencie valuable?
High quality product attracts high value in price your ability to get it determined by the importance you place on it your love and passion for it and your willingness and determination to pay the price.!
Cryptocurrencies are valuable because people are willing to exchange them for real goods and services, and even cash.Why do people still want cryptocurrencies in 2021?
Some people like the fact that cryptocurrencies is not controlled by the government or banks.
People can also spend their cryptocurrencies fairly anonymously. Although all transactions are recorded, nobody would know which ‘account number’ was yours unless you told them.
Every transaction is recorded publicly so it’s very difficult to copy cryptocurrencies, make fake ones or spend ones you don’t own.
It is possible to lose your crypto wallet or delete your coins and lose them forever. There have also been thefts from websites that let you store your coin remotely.
Bitcoin Vs stock
The main difference between Bitcoin and stock is that Bitcoin price can change with the speed of light. While stock price are more stable in 2015 Bitcoin price fluctuated between $200 and $500 per coin. However during 2017 the price rise reaching a high of $19881 in December. before dropping below $3500 In December 2018. From January 2020 to January 2021 alone Bitcoin price bounced back from $3888 to over $39800 . Stock growth haven’t been as dramatic as Bitcoin. But it’s also been more stable since 2015. The S&P500 index remained at right around $2000 in early 2015. While there have been ups and downs since then the S$P500 is around $3100 as of July 2020 the DOW JONES industrial average hoverd between $17000 and $18000 in early 2015. In December 2017 when Bitcoin was peaking at Nealy $20,000 the (DJIA) was at about $24,000 as of January 2021 the (DJIA) is around $31,000 Bitcoin has been valatile since I was created. Since there was no natural way to value it apart from demand. With stock even though there are ups and downs and some volatility in short-term there’s more long-term and historically support.
What does it means to hodl?
HODL” is a term that’s thrown around a lot in the cryptocurrency community. Since it’s used so often, it has become the slang term new investors usually learn first.
HODL refers to an investment strategy wherein investors muster up the determination to not sell their coins, despite a plunge in the market. When a price plunge occurs, investors will often see the asset with negative sentiment. However, the ones implementing the HODL strategy will continue to hold their coins and not sell.
Theres a lot of buzz about Bitcoin these days in late October the price per Bitcoin reached a new 52 weeks high on the news that payment Giant PayPal would allow it users to treded in Bitcoin and other crypto-currencies. According to lan balinan Bitcoin is the greatest investment opportunity of our generation. Other major businesses such as Microsoft Corp overstock and AT&T accept Bitcoin as form of payment. Demonstrating a sign of broader adoption. Indeed Bitcoin is here to stay unlike Fiat currencies Bitcoin can not be hypern flated. it blockchain is coded so that there will never be more than 21 million Bitcoin in existence and there are only 2.8 million left to mine. The price of Bitcoin asset should rise as demand outstrips supply. And total supply is capped at 21 million. On October last year square bought 4,709 BTC for $50 million at $10,617 per coin while PayPal said that it will allow it users to trede in Bitcoin.
HOW HOLDL COME ABOUT
The term originally came from a post from a popular bitcoin forum, Bitcointalk. A user by the name of GameKyuubi got a bit tipsy on his whiskey and posted a typo-laden message on the forum. He went on about how people were calling him a “bad trader” for not selling during the recent price plunge. Nevertheless, it didn’t stop him from “HODLing,” and despite the comic relief that the drunken rant provided, the essence of the post stuck around and still does to this day.
What was originally a drunken typo posted on the 18th of December 2013, has become a fundamental term in 2020’s cryptocurrency market: “I AM HODLING.” Since its original posting, the cryptocurrency community has then come up with several meanings for the typo, with “Hold On for Dear Life” being the most popular. In fact, it has even been dubbed as an “essential slang term in Bitocin culture” by Quartz in 2017.
A look at it
In this day and age of bitcoin, there are several trading strategies people can use. HODLing doesn’t entail full-time commitment like day trading does and may be the perfect entry strategy for beginners. Instead of buying and selling based on short-term price moves, a user who HODLs simply buys bitcoin and then holds on in the hopes of its price rising in the future.
Despite there being mostly only two steps to HODLing, this trading strategy requires a great deal of emotional strength. Just from 2011 to 2013, bitcoin’s price saw an increase of 52,000%, and then in the following year, it dropped 80%. This volatility in price is why HODLers experience a great deal of emotional stress.
In most cases, there are two antagonists to the HODL strategy: FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt). These two demons can often lead to investors selling at low prices, ultimately making less profit than initially intended.
For hardcore bitcoin believers, also known as Bitcoin Maximalists, HODLing means more to them than just battling the profit-eroding inner demons. The Bitcoin Maximalists believe that, ultimately, cryptocurrencies will replace fiat currencies. To them, it’s more than just about making a profit—therefore nullifying the relevance of the fiat exchange rate.
The pros and cons of hodling
People who are experienced in trading bitcoin may say that the HODLing strategy may not maximize profit as much as other strategies. Although this may be true for these people, different trading strategies, if not implemented correctly, can do more harm than help.
As mentioned earlier, HODLing may be the perfect entry strategy for new investors. Compared to the technicality of, let’s say, day trading, which is extremely complicated and time-consuming, HODLing may be far simpler. It doesn’t have as steep a learning curve and doesn’t require a full-time commitment, unlike some of the other strategies.
On the other hand, there is the issue of HODLers not taking full advantage of bitcoin’s volatility. If done correctly, other trading strategies have the opportunity to yield more profits as they rely less on hoping for bitcoin’s price to spike. Instead, they rely on the keen eye of traders and their ability to see profit opportunities in the market.
Another disadvantage of HODLing is that because investors are clinging onto their coins “for dear life,” they’re not being used for their original purpose—as a means of payment. Because bitcoin isn’t being used for that purpose, the development of the coin and bitcoin-accepting stores are further slowed. In addition to that, the HODLing of coins creates barriers that prevent mainstream adoption as bitcoin is seen as an investment tool rather than a real tool with real opportunities to help the economy.
Even though the term started out as a typo many years ago, its effect on the cryptocurrency market has been immense. And although it may have its own set of disadvantages, just as everything does, it may still be a viable strategy.
Thanks to GameKyuubi, we have a tried-and-tested strategy (or at least a name for it) to earn a steady profit with our bitcoin.
It’s only fitting that we end with a quote from the post that started it all: “You only sell in a bear market if you are a good day trader or an illusioned noob. The people in between hold. In a zero-sum game such as this, traders can only take your money if you sell.
Cryptocurrency following aside, Lamborghini has always stood for new money. This association with new money is the reason you see models of the car in music videos like Kanye West’s “Mercy” or A$AP Mob’s “Yamborghini High”. It became a way for artists to scream to the world, “I’ve made it to the top and I need everyone to know!”
And it’s not only artists. Having a Lambo has a connotation of “making it” in America, the “Land of Opportunity.” However, it also had the connotation of “get rich quick, then fizzle out.”
Fortunately, the perspective of the cryptocurrency community has always remained positive. Since owning a bitcoin-bought Lamborghini equated to “making it,” many bitcoin holders saw the digital asset as a means of breaking out of their current financial struggles. They saw it as an alleyway to live a life of luxury and people were determined, to say the least, to “make it.”
Whenever a new coin pops up in the market, there’s always the question: When Lambo? When will it get to the point at which we can finally buy Lamborghinis with bitcoin or other cryptocurrencies?
In 2013, a user on 4chan, a popular image-based Internet forum launched in 2003, bought a brand new Lamborghini Gallardo with bitcoin. It isn’t the earliest recorded purchase (supposedly), but it’s a legendary story that catches a lot of envy from traders in the cryptocurrency community.
The 4chan user went to the nearest dealership, which was in Newport Beach, California. The buyer leaked the purchase document and the story quickly went viral.
The buyer spent exactly 216.8433 bitcoins (209,995 USD at that time) on a fancy, yellow 2014 Lamborghini Gallardo—a V-10 and 552 horsepower piece of art that could go from 0 to 60 mph in less than 4 seconds.
The anonymous buyer’s post on 4chan included a photo of the car in the store with the caption:
“bought this today with bitcoin.
it gets here next week, what should i expect?
If that doesn’t scream, “I’ve made it,” then we don’t know what does. The mix of humility and “I don’t know what to do with this supercar” really adds a little extra flavor to the post. We believe the slang term for this kind of behavior is “flex.” The funny thing is, nobody even believed the “buyer”—so what’s the next move for a maximum “flex?” Yup, posting the receipt:
With the purchase going viral, the dealership quickly took pride in the new-age (and very expensive) sale they made. The press soon followed and as a result, the dealership found themselves having many new and serious crypto customers who want to exchange bitcoin for a Lamborghini. Around the same time, they were even able to sell a Tesla Model S for 91 bitcoins.
Thanks to sales like this and the luxury car purchases that came after, a newfound motivation for crypto holders to attain that level of success was born…but has it stopped?
Let’s fast forward to today, where bitcoin is helping a significant population—the unbanked and underbanked. We’re at that point where bitcoin is mature enough to have actual real-use cases to provide a financial passport to virtually anyone.
The idea of “When Lambo?” came from a time where people only saw bitcoin as an investment tool. Now, cryptocurrency is something that’s so much more than that. Don’t get us wrong, there are still people out there who want to spend their crypto on a shiny new luxury car, but nowadays, you’ve got to look at crypto as a game-changing technology and a new form of money to be taken seriously.
We’re past the point of “getting rich quick” and we’re now at “cryptocurrencies can really help those in need.” That’s what it should be all about. Still, we can’t deny the symbolism of a luxury car like a Lamborghini. We can’t deny what it represents.
What does it represent? It represents the reality that dreams can come true. your average Joe trying to make a name for himself. a person’s way out of not knowing where their next meal is coming from, whose couch to sleep on tonight, or how they’re going to pay their rent. The Lamborghini is an indulgent way of expressing financial freedom. Got the money for it? Then, why not? Go buy yourself something pretty!
CONCLUTION: don’t ignore the fascinating ‘blockchain technology’ that cryptos run on.If you like science and technology and want to get a glimpse of the future and how Internet 3.0 will likely reshape global society, read up on blockchain_techntology. It’s not the easiest concept to grasp, but overly intriguing. Cryptocurrencies are just one part of blockchain tech. At the moment, they are merely a new speculative asset class and potentially the future of money. Blockchain technology, however, has the potential to be a disruptive new technology that impacts everything from healthcare to farming.