Now y’all may be wondering what cryptocurrency is and how it came about. I had the same thoughts as you the first time I heard about it from an I.T guy working with a music award shows company.
What at all is cryptocurrency? Who developed it? And, how did it come about? Cryptocurrencies are systems that allow for the secure payment of online transactions denominated in terms of a virtual ‘token’. Simply put, cryptocurrency is an electronic money.
Although there are other cryptocurrencies that have been developed, the first cryptocurrency to gain the public’s attention was Bitcoin, which was launched under the pseudonym Satoshi Nakamoto.
It is however baffling till now that, no one knows who or what this Nakamoto is. It could be a group or an individual, but truth is, the real identity is yet to be revealed.
Many marketplaces called ‘bitcoin exchanges’ allow people to buy and sell bitcoins using different currencies. This is done because bitcoins can be used to buy merchandise anonymously. In addition, international payments are made easily and cheap because it’s not tied to any country. Everyone can use cryptocurrency.
Cryptocurrencies are created and used by private individuals or groups. The amazing fact about this electronic currency is that it’s not controlled by any national government. They are considered alternate currencies- medium of financial exchange that isn’t related to any state policy.
The supply of cryptocurrency and its value are controlled by the activities of the users. Cryptocurrencies use extremely complex code systems that help secure their units of exchange. These developers build these protocols on advanced mathematics and computer engineering principles that render them virtually impossible to break and thus, to duplicate or counterfeit the protected currencies.
The security systems also mask the identity of any cryptocurrency user which then makes linking a transaction or fund flows to a specific individual or group extremely cumbersome.
Due to their essentially impenetrable data security, cryptocurrency users enjoy a lot of benefits not available to users of fiat or traditional currencies like the U.S dollar, Ghana Cedi or Pound Sterling.
For example, it’s easy for a government to freeze or seize a bank account of someone within its jurisdiction; but with cryptocurrency, it’s very difficult to do same with funds held in there even if the person were a legal resident or a citizen.
On the other hand, cryptocurrency comes with a lot of risks and drawbacks such as liquidity that don’t affect many traditional currencies. To add more, they are sometimes used in black market deals so many countries view it with absolute distrust.