So what is cryptocurrency?
If you are here reading this, then you probably have very little idea about what cryptocurrency is, and it is perfectly fine. We also had to learn it before you, and do not worry this will not get too technical.
Cryptocurrency is a digital coin, a new form of money that can be exchanged for “real” money. There are currently more than 4000 different cryptocurrencies in existence and they are all based on blockchain technology.
And then what is blockchain technology?
Blockchain is basically a different kind of database that exists on a network of a vast amount of computers all over the world. Each block represents a certain amount of information/ledger. Once the block is filled, it is then chained together to the previously filled block creating a so called blockchain. All the information entered into the blockchain is irreversible, unchangeable and the history can be accessed by anyone.
Cryptocurrency is just one small thing you can do using the blockchain technology. We are only starting here. Think DeSo for example. The new social media platform is also built on blockchain.
Can anyone see my identity then?
It is a yes and a no. When it comes to trading, all the transactions on the blockchain are completely trackable. Every single move is visible to anyone.
At the same time, when it comes to your identity, that is fully private. Anyone can register a crypto wallet that does not require any information about your identity. No one will make you send in your passport details or do any due diligence on your financial situation. Your identity is safe.
If blockchain is visible to anyone, can anyone take my money?
Nope, the information is protected by a method called cryptography. Each block is encrypted with a puzzle that is pretty much unsolvable, making it impossible to counterfeit or manipulate in any way.
Why should I care?
You are probably still wondering why cryptocurrency is good for us. First of all, cryptocurrency is part of blockchain technology, which means that the information is decentralised and is sitting on many computers all over the world. This collection of data is in the hands of the people, anyone can be part of it, and no one can control it.
A financial institution can freeze your account any minute, and you might never get access to your funds again. With cryptocurrency, you are the only person with access to your online wallet and no one can take it away from you. There is no bank that has full control of your account, and there is no middle man or a broker who takes a cut of every transaction you make. Think of all the fees you have to pay to use a credit card or transfer money.
Banks are becoming outdated. Wire transfers are usually very slow and cost a lot of money and half of the population does not even have access to a bank or an ATM.
Central banks of a country have the ability to print as much money as needed in case of an economic problem, creating inflation and making the money worthless and eventually causing an economic crash. Most cryptocurrencies like Bitcoin and DeSo are limited. There will only be a certain amount of the coins available once all of them are mined and thus they can not lose value.
How did it all start?
In 2008, a person/or persons named Satoshi Nakamoto created the first ever blockchain technology. Bitcoin was introduced and called a peer-to-peer version of electronic money. To this day it is unknown who the founder really is.
Only in 2011 have new alternative cryptocurrencies been created to fix some of the flaws of BitCoin like speed, design, security and other tech stuff. They are called “altcoins”.
And how does a Bitcoin come to life?
Cryptocurrencies are created by something called mining. The process takes time, it is not free, as a lot of energy is consumed while doing so. Computers all over the world work on tasks called Proof of Work. These tasks are complicated math problems, and once a computer solves one first, it gets a reward in a form of cryptocurrency.
Can I get cryptocurrency without mining?
In order to get crypto without mining, all you need to do is buy online. Just like you exchange other currencies like Euros or Dollars for another currency.
The safest and quickest way to do so is by registering at a crypto exchange market where you can shop for crypto using a bank transfer or a credit card. If you would like to shop for some crypto here is the list of the best exchanges: Binance , Coinbase, Bittrex and Blockchain. Once you have some Bitcoins, you can exchange them for DeSo and start your investment journey.
Another way to get some crypto is at a peer-to-peer market, where you trade directly with another person and choose whatever payment method you both prefer. Even a gift card!
Then there is also a possibility to meet face to face and even charge a premium for travelling and meeting the person, although this version can be quite risky and not something we would suggest for a beginner.