Digital Currency: Cryptocurrency

Cryptocurrency is mainly called the short form of crypto. Cryptocurrency is a digital asset or virtual asset that can be used as a means of exchange like money for secure transactions.

All transactions are kept in an autonomous public data system that is freely accessible to all users, hence cryptocurrency/crypto is built on a digital decentralized system that does not have a higher authority for transactions on it.

Unlike a native currency of any country that is regulated by the central bank of the country, cryptocurrencies are regulated by the supply and demand of a token or coin.

Cryptocurrency is of two types which are Utility Token and Shitcoins, lets's have a little peep into this.

Shitcoins are a sort of cryptocurrency that has little or no digital value and has no obvious utility or purpose. I will be talking more about this in later Articles.

Utility Tokens are types of cryptocurrency that are of a wide variety of uses such as; Financial transactions, Purchase of assets, payment of bills, and so on. These utility Tokens are further divided into two which are Bitcoin and Altcoins.

Bitcoin is the first type of cryptocurrency that was created in 2009 by Satoshi Nakamoto who is believed to be an anonymous developer of the most known and most traded cryptocurrency.

Altcoins is the name given to other cryptocurrencies created after Bitcoin such as Ethereum, Litecoin, Ripple, Tron, Solana, and so on. All these Altcoins have been saved and operate on Similar or different Blockchain.

What is Blockchain?

Blockchain is cloud storage that stores information in block form in order of creation with time, and date which makes them be in form of a chain. They are accessible by the public or any internet user because they are not under any authority control as they are fully decentralised.

Blockchains are found to be secure as they are well encrypted and build to be free from cyber attacks, free from data alteration, and hacks as it uses encryption to verify transaction data.

What it takes to own a cryptocurrency

Having Cryptocurrency is a no brainer as there are just basic steps just like owning a normal currency like a dollar bill.

Cryptocurrencies can be minted, rewarded, bought, shared and exchanged. Minting is the use of the computer to solve mathematical problems and get rewarded with a cryptocurrency. Cryptocurrency can also be bought from brokers and crypto exchanges and can be shared between peers using P2P (peer-2- peer) or gifted among peers or brokers to users or exchange companies and brokers.

Having to own cryptocurrency does come with the question of how to keep it safe and how to avoid being scammed in the process of acquiring. Just like the native country currencies that need to be kept in a wallet, so it is for cryptocurrency also as they need to be stored in a Crypto Wallet.

Crypto Wallet is a wallet where cryptocurrencies are kept safe from loss and stealing this is done by having a keyword phrase that's meant to be kept by the user only to avoid cyber attackers and not shared with anyone to avoid phishing attacks. there are two types of wallets which are Hot Wallet and Cold Wallet.

Hot wallets are wallets that are available online and save cryptocurrency with no fee attached and this is offered by most exchange platforms but not all.

Cold wallets are wallets that are available offline on hardware which is attached with fees and this is individually done.

How Do Cryptocurrency works?

Cryptocurrencies are digitally operated on blockchains with good encryptions to validate data so this made them swappable, tradeable and exchangeable on the right platforms; Swapping a token for another token is done on a decentralised swap DApps (to be explained in more articles) that supports the blockchain of the two tokens, Tradeable with other tokens or against another token, Exchangeable with another token on an exchange platform.

The value and operation of Cryptocurrencies depend on the supply and demand of the token which causes it to be highly volatile as crazy market movement is noticed.

Cryptocurrency market value and price movement is well operated and can be studied from a digital platform called CoinMarketCap (CMC). CMC has been the source for many crypto exchanges and brokers for every cryptocurrency price value and market movement. An attack on this platform will cause lots of disruption in the value and market price of cryptocurrency as the whole world has experienced this in late 2021.

How to avoid Scam in Cryptocurrency

Doing your own research is the first step and always the best thing to do before investing in any crypto project

Cryptocurrency criminality is, unfortunately, on the rise. Scams involving cryptocurrency include:

Phoney websites: Scam sites with fake testimonials and crypto jargon that promise huge, guaranteed profits if you keep investing.

Virtual Ponzi schemes: Cryptocurrency thieves offer fictitious opportunities to invest in digital currencies and create the illusion of high returns by repaying old investors with money from new investors. Before its offenders were charged in December 2019, one fraudulent organization, BitClub Network, had raised more than $700 million.

“Celebrity” endorsements: Scammers act as millionaires or well-known figures on the internet, promising to quadruple your virtual currency investment but instead stealing what you contribute. They might even use messaging applications or chat forums to spread rumours that a well-known businessperson is supporting a particular cryptocurrency. The crooks sell their investment after encouraging investors to purchase and driving up the price, and the currency loses value.

Scams using virtual currencies: The FBI has issued a warning about a new trend in online dating scams, in which con artists persuade people they meet on dating apps or social media to invest or trade in virtual currencies. In the first seven months of 2021, the FBI’s Internet Crime Complaint Centre received over 1,800 reports of crypto-focused romantic scams, with losses totalling $133 million.

Otherwise, fraudsters may impersonate legal virtual currency dealers or set up phoney exchanges to defraud customers. Another type of crypto scam involves deceptive sales pitches for cryptocurrency-based individual retirement plans. Then there’s plain cryptocurrency hacking, in which hackers get access to people’s digital wallets and take their virtual cash.

There is a lot to EXPLORE when it comes to Cryptocurrency as it is still in its infancy stage, hang on as we all see what this digital currency unfolds for us in the future.