AN INTRODUCTION TO CRYPTOCURRENCY

There was a time when I really didn’t understand cryptocurrency, I heard words like bitcoin, Ethereum, digital currency… I couldn’t help wondering how a currency could be made digital and virtual and still have some value. At some point, I thought it was illegal to be involved in it, but all that changed when I decided to do extensive research on this term/concept, then my eyes became opened. I guess that you reading this article now is also trying to do the same.

Note that Cryptocurrency is a vast and a very complex topic in its own rights, but in this article, I will give you a high-level overview of what this rockstar word is.

For you to actually define a compound noun, you certainly have to define the individual nouns.

Cryptocurrency = Crypto + Currency

What is Crypto?

It simply means concealed or secret. You could have seen a number of words that begin with crypto such as cryptography (which is a branch of mathematics that focuses on securing information and communication techniques using mathematical principles and concepts).

Why I mentioned cryptography here is because it has been applied to many areas of technology that emphasize security. AND CRYPTOCURRENCY IS NO EXCEPTION! The foundation of cryptocurrency is built on cryptography (which means that you will find many complex mathematical concepts within it).

Modern cryptography is concerned with four major objectives viz:

  1. Confidentiality
  2. Authentication
  3. Non-repudiation (“the ability of the person who receives a message to know who sent it, especially by the digital signature on the message” – According to Macmillan Dictionary)
  4. Integrity
  5. If you want to learn more about cryptography, there are many online resources available, though I can recommend a book titled “Modern Cryptography” for the curious and those who love mathematics.

What is Currency?

According to the Oxford Dictionary, currency is a system of money in general use in a particular country.

The irony of this definition is that any cryptocurrency you come across is not limited to a certain country. Unlike Dollars, Naira, Pound and so on, a cryptocurrency is more of a digital system of money that is secured by cryptography. Is it beginning to make sense?

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To further understand what cryptocurrency is about, let’s learn from history (You know that for you to learn the details and reasons about anything, it’s best to learn from the root, and that is what we are about to do).

HISTORY OF CRYPTOCURRENCY

Though Bitcoin was the first popular cryptocurrency, the concept of cryptocurrency started out in the 1980s as a term called “Cyber Currency”. The aim was to develop a currency that is…

  • Virtual/digital.
  • Not owned by any government.
  • Does not require trust in any third party.
  • Highly secure and transparent.

Attempts to develop such an electronic cash system were not overall successful until 2008, when an anonymous group of persons (we don’t know if it is a group or a single person though) under the name Satoshi Nakamoto released a paper titled Bitcoin. This paper proposed a digital currency that did not require trust in any third party. One year later, Bitcoin came into the picture.

NOTE: Since the 1990s, cryptographic protocols and softwares have been developed to bring the idea proposed by the white paper to life. Many technological inventions were ideas that have existed years before the applications.

Since Bitcoin, there has been a revolution of cryptocurrencies, of which many failed and some were successful. After every great invention, there comes micmicks and adaptations, and Bitcoin was no exception. As promising as the concept of cryptocurrency, between 2011 and 2016, there were massive failures, and many inventors lost their money. Trust in cryptocurrencies declined drastically.

The reason for this was that the new technology was over-hyped while not yet fully understood. 2017 was the year of cryptocurrencies since there was an unprecedented growth in the value of Bitcoin and other cryptocurrencies. Even in January 2018, the value of all cryptocurrencies rose to about $820 billion, though it later declined that same month. By December 2021, the value of the cryptocurrency market was about $2.3 trillion.

Some of the most popular digital coins include:

  1. Bitcoin
  2. Ethereum
  3. Tether
  4. Binance Coin
  5. Solana e.t.c

What is your take about cryptocurrency? Please leave your comment below. Shallout!!!