Cryptocurrency is the buzz of the internet.
In fact, multiple media outlets stream live coverage on the latest crypto news. Although, it was conceptualized in 2007 and actually launched in 2009, by the “mysterious” Satoshi Nakamato (bitcoin founder), Cryptocurrency is now, the hottest financial trend.
The two key elements that power the technology that gives life to Cryptocurrency are Bitcoin and Blockchain. Bitcoin is money that is digital. Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank (Wikipedia, 2018).
To better understand bitcoin, one must understand the history of currency from a global standpoint. In the ancient world, people exchanged spices, like curry, for goods and services. As time moved on, the world adopted gold as a form of universal currency. The mining of gold started around 7th century BC.
Thousands of years later, paper money (fiat currency) was introduced to the world in 15th century AD. Now, we are collectively at the threshold of a new financial wave, Bitcoin. Bitcoin’s are digital encrypted coins/tokens that can be purchased with fiat currency.
Essentially, Bitcoins are created by coding an actual algorithm in a computer programming language. A group of developers/system engineers can team together in order develop a new coin or token. Alt Coins, are direct derivative of Bitcoin. Meaning, it’s the same technological concept formed by a different group of developers/engineers.
Blockchain is enabling technology that allows for the transfer of assets from one individual to another individuall, P2P ( peer to peer). Prior to completing transactions, multiple verification take place on different nodes (small computers) that are ran by independent peers through out the globe.
Nodes are not a financial regulating party. Nodes simply verify all transactions sent through a particular blockchain system. Each coin has its own system of nodes and mining.
After verification is completed, the transaction is “mined” meaning recorded to an opesource ledger system that cannot be manipulated once the transaction is completed. In other words, once it’s done, it’s done. Blockchain was specifically designed to combat issues surrounding fraud, therefore, once a transaction is completed it cannot be adjusted or refunded. The transaction becomes locked and encrypted.
Some might think this concept is too restrictive. However, you have to keep in mind the main issue Blockchain was created to solve, p2p transfers with no 3rd party intervention. When money is wired from one country to the next, it has to verified by multiple regulating parties that charge outrageous fees.
For example, a traditional wire transfer from Kenya to Zimbabwe for 100k could be subjected to 15% or more in bank fees set by financially regulating bodies (i.e. world bank or bank of england). Large transfers usually require authorization from different branches of the bank in multiple locations throughout the world.
Someone would have to authorize in Bankok and then route the data to someone in New York for authorization. The person in New York would then have to route the data to someone in Brazil and so on. This process can be very rigorous and expensive.
Blockchain technology eliminates the 3rd parties and provides a system of security. In fact, as of date, Bitcoin (as a system) has never been hacked. Some eCoin Wallets and Crypto Exchanges have had some security issues, but not all. More importantly, its cheaper to send money through a Blockchain system because the fees are less expensive.
Blockchain technology is definitely gaining traction throughout the world, especially in african nations. In the east african nation of Uganda, Blockchain technology is used to store land registry titles.
By storing land titles on opensource encrypted ledgers (i.e. Blockchain), the technology prevents duplication of land titles and by doing so, preventing fraud. Once stored in the system, documents can’t be adjusted or duplicated.
However, the user can look at a document but they can’t make any changes. Like I said before, once it’s done, it’s done. Stick a fork in it!
**Disclaimer: I am not a financial adviser. Nor, do i provide financial advice. I offer my personal opinion on the subject matter. I am not a paid sponsor of any cryptocurrency entity.
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