FAQs

CRYPTOCURRENCY FAQs

They are decentralized, open source internet ledger (a book of records) that facilitate the transfer of value on the internet. lets break down a bit. The operative words are;

  • Decentralized
    Decentralized means crypto currencies have no central authority there are no persons, group of persons, governments, financial institution etc that can lay a claim on or control a true cryptocurrency.

  • Open source
    Open Source: A true crypto currency is open source this means that anyone at anytime can open up the github page of a particular crypto currency and see the current state of development of that crypto curreny. One can also see what developers on that particular crypto currency project are doing in real time. it also means that anyone can contribute directly as a developer to improving any particular crypto currency they choose.

  • Ledger
    This is simply a book where records are kept. A true crypto currency in a internet ledger. All records of transaction on this crypto currency are safely kept.

The security and maintainance of a true crypto currency is achieved by consensus.

 

CONSENSUS is the process by which miners of a cryptocurrency or delegated block producers of a cryptocurrency come to an agreement that a particular transaction is true thereby verifying it.

 

CONSENSUS results in the production of new blocks of the crypto currency added to all existing previous ones, hence the name block chain. New blocks are produced when miners scattered across the world use computing power to solve complex math problems that result in the production of a new block of the cryptocurrency.

This is the technology on which cryptocurrencies are built. They are built on the decentralized block chain.

 

Whenever a miner (an individual that sets up a computer solely to mine cryptocurrencies) verifies a transaction and other miner validates it as true by CONSENSUS that particular transaction is added to all the previous existing blocks (from the first block i.e block zero or the genesis block).

 

The linking of all blocks of transaction is what brings about the term BLOCKCHAIN

A cryptocurrency is simply a form of internet money based on the decentralized block chain platform. But a crypto asset of a decentralized autonomous company/corporation/community based on the block chain technology. A cryptoasset has a specific sector of the economy that it targets. It is not simply a currency, for example:

 

– Ethureum is a platform for smart contracts
– Lisk is a platform for decentralized app building and deployment.
– Trade.io is a platform for trading stocks and other financial securities on the decentralized blockchain.
– Steemit is a decentralized social media platform etc.As you can see, all the cryptoassets have various sectors they are targeting to distrupt.

 

However, for anyone to use any of the above mentioned cryptoassets, he/she has to purchase the tokens (or cryptocurrency of the platform) e.g the cryptocurrency (token) of the Ethereum Cryptoassest is ETHER.

 

The cryptocurrency (token) for the lisk cryptoasset is called LSK
The cryptocurrency (token) for the steemit platform is called steem.

 

A cryptocurrency is simply a form of money on the internet but a cryptoasset is much more.

 

It is actually decentralized platform that hopes to transform and disrupt a sector of the economy.

  1. 1. Banks & other financial institution
  2. 2. Online ecommerce
  3. 3. Online clond (data storage) service
  4. 4. Online gaming services
  5. 5. Hedge funds
  6. 6. Online trading companies
  7. 7. VPN providers
  8. 8. Ride sharing services viz Uber, taxify, lyft etc
  9. 9. Home sharing service e.g Air bnb

The decentralized blockchain technology will transform everything.

The fiat currency we spend every day (dollar, pounds, Euro, Naira) etc is based on an infinite supply. It can be supplied and printed to oblivion.

 

On the other hand, cryptocurrencies have a limited supply, have no central authority and so are a store of value. In thenear term (think 1-5 years) cryptos will not replace fiat money but in the long term (5-15 years term) I believe the whole of the financial landscape will be completely different and cryptocurrencies will have matured and have completely or almost completely replaced fiat currency.

 

For a full report on why cryptocurency will replace fiat currency on the long term

click here.