Last updated on July 15th, 2020 at 09:22 am
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This write up is aimed to bring to clear understanding everything a layman needs to know about Cryptocurrency.
WHAT IS CRYPTOCURRENCY :
This is a digital currency that can’t be held like fiat currencies ( Naira, Dollar, Yen, Cedes etc). In other words.
Cryptocurrency is a soft copy of money while Fiat Currency is a hard copy of money.
So just like Naira is been used to transact here in Nigeria and Cedis in Ghana, Yen in China and Zar in South Africa. So it is to cryptocurrency. Just as Waves Platform uses Waves Cryptocurrency for it’s platform so does Ethereum Cryptocurrency serves as the currency for Ethereum Foundation’s Ecosystem. How is that? So easy to understand right? OK…..
Now let’s see this now. You know Dollars (USD) is currently in use worldwide as the base fiat currency for international transactions. So any country like Nigeria that is using Naira might wish to get Chinese Yen but the market for the direct transfer of Naira to Yen isn’t available. He will then use Naira to USD then USD to Yen. You understand it right OK… This is exactly what happens when I have Bitcoin (BTC) which is currently the base cryptocurrency for international transactions. So maybe I want to buy Ethereum Foundations cryptocurrency, Ethereum for use in its ecosystem. And maybe I have the Waves Cryptocurrency from Waves Platform. I will then have to buy BTC first using my Waves, then with my BTC, I will buy Ethereum. So simple right.
ITS RELATIONSHIP TO FIAT :
But one may ask how do I buy this Waves at the initial stage, OK…. a very good question. Now we have Naira to USD and Yen to USD within the Fiat Market. So it is in the Cryptocurrency Market. We have Waves to BTC. And Ethereum to BTC. So now, the question still remains “how do I get this cryptocurrency? “. Normally we work and earn fiat money. In the same manner we can also work and earn Cryptocurrency. Surprised….? It’s quite easy that way. Also we can have this cryptocurrency by buying with Fiat Currency. One may ask, “does it mean we have Fiat Currency To Cryptocurrency Market? ” Oh Yes! We have. So now we can buy Cryptocurrency with Fiat Currency and also we can buy Fiat Currency with Cryptocurrency. So simple right? ?. OK….
Next thing now is this; Does this Cryptocurrency serve the same purpose as Fiat Currency? Oh yes! It does. So if you can use Fiat Currency to pay for anything or pay to anybody. You can as well use cryptocurrency to pay anybody or anything.
DIFFERENCE BETWEEN CRYPTO AND FIAT:
But there are some differences that abounds here. First of it, is the use case of cryptocurrency;
Fiat Currencies are popularly used and has universal acceptance and usage. But it isn’t so in cryptocurrency. Each government of any sovereign state in the world uses it’s own Fiat Currency but it isn’t so with Cryptocurrency. In other words Cryptocurrency can be said to be a mode of payment and not a Legal Tender. Hope you are following?… Yes cryptocurrency might be said to be like PayPal, Visa Card, Master Card etc. You are getting it right? It can also get to be a Legal Tender when it gains a Universal Acceptance. Does it flow….?
OK… Now we know what is Cryptocurrency and it’s relationship to Fiat Currency. Let’s now get to see the Investment Aspect of Cryptocurrencies. Should Cryptocurrency be controlled by Government it may end up as a Legal Tender. But the decentralized nature and anonymity of some cryptocurrency sets it far away from been a Legal Tender in other words a mode of payment which can be accepted by anybody.
INVESTMENT/ TRADING ASPECT:
Alright. Hope you got it right now. Let’s see how this cryptocurrencies come to be. This cryptocurrencies uses a technology called Blockchain Technology. But we might not go into this now. In upcoming tutorials we will. So now let’s see more of the Investment Aspect of Cryptocurrency. This will lead us to what we call Cryptocurrency Trading. Hope you have heard of Stock Trading under Stock Market right? So it is here, Cryptocurrency Trading under Cryptocurrency Market. Yes. OK… But many of us don’t really know about Stock Market. So let’s use this. As a student, you have different courses to choose from and study. And after your secondary school education. You now chose from maybe Pharmacy out of many other courses out there. You have to study this course in other to pass them. If not you will fail them. This course are offered in different higher institutions in other to help you achieve this goal of being a Pharmacist. So it is when investing in Cryptocurrency. So it is with Cryptocurrency Trading also. You have wide varieties of Cryptocurrency to invest or trade on. It’s your sole responsibility to search around and make sure you of the ones you are choosing. You then end up with few of these cryptocurrencies to trade on. These cryptocurrency is available in different Cryptocurrency Exchanges to enable you trade them for profit. The sole aim is to make profit at the end. The approach and strategies you use to make this profit depends on how much effort you have invested in learning about them and the ways you have applied to enable you achieve your goal of making profit. So if you play well. You make profit. And if you play badly. You loose.
Now what are these Cryptocurrency Exchanges that we can trade on? What are these strategies one is expected to go through? OK… Yes.
Let’s stop here for now. Read and assimilate the above tutorial. After we will come back with the next tutorial.
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DISCLAIMER : This is not an investment advice. But rather an opinion to help anybody interested to understand cryptocurrency.
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