You might have heard people around the office or on tv or social media talking about cryptocurrency and wondered what it was. Cryptocurrency got its name possibly from the cryptographic technology used in part to create it and that the first popular use for this tech was currency like. I write currency like because most crypto currencies are not really like currency at all. Sure people trade them between other and sometimes for good and services online. But often they are volatile and people do not accept a wide range of them as currency for this reason.mIn a way giving someone cryptocurrency for a good or service would be like handing them a cow or bushel of corn. Could you do business by trading food?
The answer of course is yes but it wasn’t very convenient so people created money or a means of exchange of an item like gold or silver or precious stones that always tended to have some value above just market pricing for a commodity like food. Plus food could go bad and people could not store it or save it up for a rainy day. Cryptocurrency doesn’t go bad and its primary use case is likely a store of value. Crypto currency though should probably be renamed to more represent what it really is. the name would probably need to be long. Digital Wealth Accumulation Asset might fit well. Or Cryptographic Digital Assets.
There are many variations of cryptocurrency. By variations I mean that there are different base cryptography that comprise how secure they are with most all being relatively secure. Many of the same base concepts are linked to the First real notable cryptocurrency you are likely familiar with called Bitcoin. The core concepts of cryptocurrency are the same in that they are immutable due to their public ledger or blockchain technology. The core computer code that makes this technology function is where there are different flavors of cryptocurrency.
With some touting the original cryptocurrency like Bitcoin and others such as Ethereum allowing developers to create smart contracts and applications that also run on the blockchain. Many cryptocurrencies due to being open source are often copies with slight modifications of the original. Others might actually use the same blockchain and distributed network to handle all of the functions of their currency. Many of these are built on the Ethereum blockchain and EOS blockchain which is a new blockchain technology. There are literally 100’s of blockchains now and some offer currency options such as tokens or coins that can be sent or traded between people who have digital wallets while others are being used privately for business operations.
Cryptocurrency generally allows people to send and receive the digital tokens or digital coins using cryptographic wallet addresses. I think of them maybe foolishly as similarly to my bank account number. I can easily share these wallet addresses with people and they can send digital tokens or digital coins to my wallet address or in my mind bank account number. But they can’t withdraw my crypto. The long wallet address number is created using cryptography which generally means it is very secure. Only the person that created the wallet address should have access to it to send funds out of the wallet via a private key.
The private key is like a super duper password also created using cryptography. It would be very difficult to guess the password even using a computer program designed to do just that. Wallet address are where you would send digital tokens or coins to and if you have the private key or password you could access the wallet to send those tokens to someone else. Here is the important part in all of this… Remember earlier about different flavors of crypto? If you have a bitcoin wallet address it can not accept Ether or Steem. Sending currency to a wallet address that isn’t the correct flavor often will cause you to simply lose your digital currency! This is super important to fully understand. If I send Ether traded under the symbol ETH to a Litecoin wallet address traded under the symbol LTC I will likely lose my ETH. The core blockchains are different and there is generally no recovery.
This brings up another topic. Light Wallets or Lite wallets. These are often generated by exchanges, trading platforms and websites for easy use by the end user. If you ever use an exchange service they will generally auto create a wallet address for you to deposit your tokens or coins into in order to exchange or trade on their platform. If their network goes down or they get shut down then any funds might be at risk as you do not have the private keys to access those accounts. Most platforms will grant users notice of such situations and allow users time to move their funds. However when the US government shut down MtGox this wasn’t the case. Many had their funds tied up and many lost their funds. This is where decentralized exchanges like Radex.ai come in handy. Other places like coinbase and even Stishit create wallets for their users to make it easier to send and receive cryptocurrency. These wallets are secure but they are not designed to store large amounts of currencies. These light wallets created by multiple types of platforms are intended to make life easier for the user. Cold storage or hardware wallets should be used for long term storage.
Cryptocurrency all has some different quirks about it. From blockchain to blockchain different currencies might do things a little differently. Some only offer hardware wallets while some only offer a light wallet. Some may create more than one private key or some complex combination of keys or passwords while other might issue a JSON file for storage that you would then upload somewhere to open a locked wallet. There are many nuances depending on which currency that is use but what I am seeing over time is the best of the best features often being adopted by major platforms and chains. If someone figures out something awesome most will soon follow with a variation or copy to stay competitive. In that respect it is nice to be getting involved into digital currency now as many things are becoming more fluid and easier to understand and learn.
In a recent video we created talking about Stishit and Stish crypto the creator hit the nail on the head. Crypto isn’t super easy to get started with in most cases but once you get started it is not long until you have the swing of things. Watch the video now and Relax and Enjoy Life!