Don’t worry if you consider yourself as one of the dummies for crypto. It’s just that some novelties deal with areas you can’t avoid. The world would be better without them, but payments are one of these.
First of all, as a painter, I’m fond of some other non-techie things. However, I’ve realized that it is all a matter of perspective. If willing to embrace it, technology is beneficial.
In the past, the printing press enabled youth to read books every day. At that time, elders were afraid that youngsters are spending too much time inside their houses, staring at pages!
Does it sound a lot like nowadays’ youth with smartphones?
Books then, smartphones now, the progress is inevitable. And whether you like it or not, some new structure always replaces another. Likewise, digital payments could become the only means to get goods.
It may or may not happen but it’s best to be prepared if it does, right?
Digital Payments and Digital Currency
First of all, we need to separate these terms. Digital payments include any transactions without a physical card or cash.
So, digital payments are the type of electronic transaction that also includes dollars or some other fiat currency. On the other hand, digital currency is just one segment of these payments.
So, it is a particular type of money that is available only in the digital world.
By Investopedia, these digital currencies can be:
Another name for these is Central Bank Digital Currency (CBDC), as the central bank of a country is issuing them. So, these are the only forms of existing money recognized by institutions.
Also known as virtual, they include all loyalty points, in-game tokens, and the most prominent – cryptocurrencies.
Cryptocurrency as Digital Currency
Finally, as the initial fear of crypto is long gone, more and more merchants are accepting crypto. Nowadays, this market is worth over $230 billion, and there are more than 40 million crypto wallets globally.
Crypto wallet, as you may conclude, is software, holding digital currency.
What is fantastic is these are the safest wallets ever. As they also come in the physical form of a USB or a paper, you can keep them like regular ones. However, these wallets have added value to the encrypted keys.
So, you can keep your digital currencies on USB, hard drive, or even a piece of paper. (Yes, a paper wallet is a code that you reprint any time you pay).
Imagine, you can print your digital money and put it beneath the bed, so you can sleep on it, too. Crazy, right?
Well, it all started as a bit crazy in 2008 when Satoshi Nakamoto, a still anonymous persona, created Bitcoin. Up until today, we don’t know much of Satoshi. Not seen in person, he wrote a set of emails unveiling a cryptography technology – blockchain.
Bitcoin got the name “cryptocurrency”, as an improved model of cryptography is securing it. As the Bitcoin code is an open-source, many cryptocurrencies appeared after its initial launch.
Variety of Cryptocurrencies
Besides Bitcoin, there are many other cryptos:
More advanced than Bitcoin as a platform for many projects.
By an article by Huffington Post, besides faster transactions, Ethereum is most famous for its smart contracts. Even though I like its contribution to the gaming industry, it didn’t succeed in replacing Bitcoin.
However, paper money didn’t replace gold as its reserve – but it is still more widely used in everyday life.
The digital currency with an idea to quickly move money around the world.
In this case, the accent is on “quickly,” as Ripple tried and succeeded in improving crypto’s transaction speed. At one point, Ripple overcame the transaction rate of PayPal, but PayPal responded by its faster alternative. Headlines “Ripple-Killer” appeared, but both payments survived.
These two cryptocurrencies are the best examples of what the interesting crypto world can be.
As you may conclude, both cryptos use the original Bitcoin code. In 2017, a group of developers that didn’t like new upgrades of Bitcoin decided to keep the old version. This phenomenon is happening a lot in crypto and has the name forking.
So, the very next year, 2018, Bitcoin Cash forked into Bitcoin SV. In this case, these guys think of themselves as followers of Bitcoin founder’s vision. Thereby, SV stands for Satoshi’s Vision. What dedication!
There are many more exciting stories and cryptos, worth mentioning. Some of these are Tether, Litecoin, EOS, Stellar, and Cardano, for example.
At this point, all of these plus 5,000 cryptocurrencies more are available across all digital currency exchanges.
Guide for Using Digital Currencies
Undoubtedly, the digital world will further improve, and this is just the start.
Like any other beginning, digital currencies still have many flaws. Volatility is a significant reason why media questions cryptocurrencies.
Therefore, it is unlikely that you would use cryptocurrencies for everyday payments soon.
The reason behind this is that their speed of transactions is still not satisfactory. Yes, crypto is competing with Visa and MasterCard that are making thousands of transactions per second.
Add volatility of the cryptocurrencies, and their everyday use is quite unreliable. On the other hand, this makes them potentially profitable!
The first viable use for coins is to buy some as their price may rise. The second option is to enter the trading business, buying and selling cryptocurrencies to make a profit.
Although learning by doing is a legit method, in this case, it is essential to learn. “Crypto for dummies” is one thing, but “trading as dummies” is an obvious path to bankruptcy.
So, don’t jumpstart your learning by buying or trading cryptocurrencies. Without even noticing, you can get yourself into severe losses. If this happens, you’d be left with two major takeaways – you blew up your resources and developed a bad feeling about crypto.
And the latter is the worst-case scenario for the crypto community. Since I am a fierce crypto supporter, I love it when people have a good feeling about crypto. It is the only model where crypto can thrive.
For this reason, many of us are trying to educate others on the digital world and crypto, providing guidelines like this one. Even though I would instead paint or play a video game, there is a higher cause we all have to fulfill!