CRYPTOCURRENCY; What it is and its socio-economics
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions.
It does not have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units. This currency is a digital, encrypted, and decentralized medium of exchange. Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains its value . Instead, these tasks are broadly distributed among its users via the internet.
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer its funds, the transactions are recorded in a public ledger. The currency is stored in digital wallets and is used as an alternative payment method or speculative investment.
Crypto received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.
How crytocurrency works
Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.
Units of the currency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.
If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.
You can use crypto to buy regular goods and services, although most people invest in cryptocurrencies as they would in other assets, like stocks or precious metals. While cryptocurrency is a novel and exciting asset class, purchasing it can be risky as you must take on a fair amount of research to understand how each system works fully.
Examples of cryptocurrencies
There are thousands of cryptocurrencies, some of them include:
Bitcoin:
Founded in 2009, Bitcoin was the first cryptocurrency and is still the most commonly traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for an individual or group of people whose precise identity remains unknown.
Ripple:
Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. The company behind it has worked with various banks and financial institutions.
Ethereum:
Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.
Litecoin:
This currency is most similar to bitcoin but has moved more quickly to develop new innovations, including faster payments and processes to allow more transactions.
Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.
Socio-economic impact of cryptocurrency
Impact of cryptocurrency in entrepreneurship
With its decentralized format, cryptocurrency is moving the world closer to a global economy in which all users exchange currency regardless of their citizenship.
This is particularly profound for entrepreneurs who are no longer subject to a merely local or national audience and customer base. Instead, they can aim for one that is international, with whom funds can be exchanged without the hassle of exchange rates and issues posed by international law.
In fact, there are cryptocurrency companies that assist business owners in Africa to make financial transactions with European, American, and Asian companies with the intention of creating financial coverage and financial liberation through exchanges worldwide.
In an increasingly digitized world, the social need to communicate across borders is now manifesting itself in financial needs, and it may be that traditional financial institutions are not able to provide this as well as cryptocurrencies, with their decentralized nature, can.
In time, entrepreneurs can assist in the opportunities to invest in, save, and send money across borders, in turn reframing global business practices. As cryptocurrency facilitates more widespread economic participation, wider economic participation may facilitate wider adoption of cryptocurrency in business.
Impact of cryptocurrency to small businesses
Cryptocurrency provide several benefits to small businesses, another positive impact of crypto on society.
The low transaction fees that come with cryptocurrency are one of the biggest reasons many establishments have opted to accept the digital currency. While traditional forms of currency, especially credit and debit cards, can cost businesses high processing fees, cryptocurrency takes away nearly everything to worry about there.
In addition to low transaction costs, crypto transactions can happen almost instantly. While debit and credit transactions may take a few days to process fully, a crypto transaction is fast and efficient. Furthermore, there is no need for a third party in crypto transactions meaning the transactions can happen quickly.
Another great benefit of accepting crypto is that it can open small businesses to broader audiences. Due to crypto being a universal, international currency, it can be used by anyone, enabling small companies to serve global customers. Additionally, with crypto being popular among younger individuals, accepting cryptocurrency can allow a small business to appeal to a younger audience. Accepting crypto enables a business to reach a broader range of customers and demonstrate its ability to innovate and progress as a company. Crypto is still a relatively new form of currency, making it the perfect time for businesses to adopt it if they want to prioritize staying ahead of the curve.
Generally cryptocurrencies has numerous significances such as;
- Inflation Protection
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Transactional Speed
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Cost Effective Transactions
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Decentralization
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Diversity
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Accessibility
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Safe And Secure
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Transparent
With the decentralized nature of blockchains, one can view the money transfer transactions by simply using blockchain explorer on the platform to track live transfers. This open and transparent system is a relief among investors and is corruption-free.
