If you’re reasonably conscious you know that cryptocurrency is not a phase – it is here to stay, and it is here to drive a movement of the new financial systems.
A little bold perhaps?
It could be a good time to mention here that in 2018, investor Warren Buffett called Bitcoin "probably rat poison squared." However his company recently placed around $500 million into Nubank, which is a major parent company offering cryptocurrency products.
Reasonable cause to get enthused?
I first came across the name Warren Buffet when I worked for JPMorgan. His name, among many other high net worth investors, remained in the game for the following 10 years of my corporate career, with Goldman Sachs and Bank of New York.
That career, and financial system, is a thing of the past.
The digital asset space doesn't need to be a dark complex abyss of computer matrix scary stuff. It can also be a tool for financial freedom - once your mindset over how it's always been, and how 'risky' the unknown is, shifts.
And that is what this is all about really.
Lack or wealth, is a state of mind.
It is widely believed that trading cryptocurrencies can be a volatile game and involve a high level of risk. Whilst this is true, all financial games are risky without knowledge. Knowledge is power, so it is time to power up and do some research.
There are three pretty simple aspects that make the crypto process work:
- it’s digital,
- it’s decentralised,
- it uses cryptography.
It’s digital – I credit you with the intelligence that this one speaks for itself.
Decentralisation – the revolution.
Decentralised is the global movement that excites investors, and is at the core of the ecosystem success - because it means that the currencies are not issued or managed by hierarchy, third party or central authority such as a government or bank. The currency is obtained, exchanged, and managed by those who use it on a decentralised exchange.
A decentralised exchange (DEX) is an online currency exchange that allows users to buy crypto through direct (also known as peer-to-peer) cryptocurrency transactions over a secure digital platform without a governing intermediary.
This is our evolution from the traditional centralised exchanges, where a third-party (such as bank, trading platform, governing institution, etc.) takes custody of the end user funds and oversees the transaction security and transfer of assets between the seller and buyer.
The secret codes of Cryptography
Cryptography is a science of secret code. It is creating a language or code that can not be cracked unless one knows exactly how to crack it. This matters for cryptocurrency because investors have a way of saying that the cryptocurrency in their possession is uniquely theirs.
Cryptography is the field of communicating in code that can be translated by just the two parties who are communicating with each other. The code is indiscernible from a third party, and further ensures that each unit of cryptocurrency is unique and can’t be copied.
Cryptography began in ancient times, with hieroglyphs and symbols, and has advanced through time along with technology. The earliest known use of cryptography was over 5600 years ago in Sumeria and Egypt.
Cuneiform, symbols and hieroglyphics were created to record transactions. These were forms of scribing and communicating information that people wouldn’t know how to read unless they understood the language system.
In modern society cryptography has digitally evolved into coding information digitally. In the digital asset space, the original information is collated and known as plaintext. The encoded version of the information is known as ciphertext.
The calculation or code used to change plaintext into ciphertext is called an algorithm and the whole process is known as encryption.
The opposite of encryption is decryption – which means turning ciphertext back into plaintext, or another readable form. Usually decryption involves both the algorithm and a key, which is generally a number.
Cryptography is an integral part of blockchain technology and the cryptocurrency universe.
Transactions and balances are all tracked on a digital ledger platform, and encrypted using algorithms. This helps with security, transparency, and tracking.
GlobalData analytics company recently predicted that revenue from blockchain platforms and services will rocket from $4 billion in 2020 to $199 billion by 2030.
Blockchain technology has been described as the ‘future internet’, and has been creating waves of enthusiasm through the alternative financial markets.
Blockchain is cutting edge technology and it is simply how Cryptocurrency data and trading lives.
The system that keeps it free and flowing. The technology is a continuously expanding simultaneous list of records called blocks, which are linked and secured with cryptography.
Blockchain technology enables automated, instant, authenticated transactions and exchanges.
Blockchain is a computer programme that was originally invented along with Bitcoin, as a decentralised way to transact and transfer digital assets and money. It is the technology piece that enables Bitcoin and other cryptocurrencies to move across the Internet.
A Decentralised Autonomous Organisation (DOA) is represented by rules encoded as a transparent digital programme. The whole process is controlled only by the members, with no influence of a central governing authority. As all of the rules of engagement are embedded into the code, no other management is required.
The blockchain ledger is a continuous behind-the-scenes foundation for all financial transactions to be securely recorded without any intermediaries. This technology allows every participant to see transactions, but no one can change or copy.
With a secure blockchain peer-to-peer transaction, there is no need a for financial intermediary, a bank, a currency exchange or even a governing body.
The blockchain ledger technology can be used for infinite kinds of completely secure transactions, from creative ideas and community, to commodities and even property transactions.
In essence, the blockchain technology is a continuously, simultaneously expanding simultaneous list of records and transactions, that never sleeps.
Cryptocurrency itself is a virtual or digital currency which is secured by cryptography, and traded on a blockchain trading platform.
Bitcoin is of course the widely known ‘grandfather’ of the currencies, created in 2009 and was the first of its kind to use cryptography as a form of security.
Bitcoin was created in 2009 by Satoshi Nakamoto (who remains anonymous). It decentralised currency and was the first of its kind to use cryptography as a form of security. Bitcoin has further become a term for a bigger ecosystem that encompasses a digital currency, a decentralised public ledger and protocol.
As the market grows, we now see limitless coins and currency options.
And why should you care about Bitcoin and the blockchain?
Mainly because this isn’t based on the pound, dollar or coins or gold. Cryptocurrency is generated by a mathematical process over a network of computers, and is then used to process and exchange the currency all around the globe.
Very very quickly.
The popularity of Bitcoin paved the way for the invention new types of coins, known as ‘altcoins’. These include common names such as Ethereum, Ripple, and Litecoin. Currently though, there are more than 9,000 cryptocurrencies in existence... and the rest.
Each altcoin operates independently, and each has its own sets of rules, community, and uses. They’re traded among investors, with transactions recorded via the blockchain, known as a distributed ledger.
We are also witnessing a rise in the Token, which are tied to a parent platform. For example, Tether and Golem are tokens used only on the Ethereum platform.
As the name suggests this is a cryptocurrency with very low volatility, and are often used for portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency (pegged or stabilised by the asset or currency).
Regulation of the digital asset space is a topic in it’s own right, though for the purpose of this exercise, it goes without saying that as an investor, it is wise to do your research and due diligence checks. There are many platforms to onboard fiat currency and buy cryptocurrency such as Coinbase, Binance, Gemini to name just a few.
Shaping the future
There is undeniably strong long-term potential for a continued rise in cryptocurrency trading value, since businesses including major banks, Microsoft and Tesla accept it. Speaking of which, CEO Elon Musk's tweets alone can occasionally lead to market fluctuations. Both China (having banned crypto on several occasions, which speaks for itself) and the Federal Reserve (also quaking in their shiny shoes) are rumoured to be developing a digital currency of their own.
So, whilst my digital wallet may not be quite as overflowing as Elon’s, I am in the tribe that is wholeheartedly optimistic that the future of the cryptocurrrency world of financial trading is more than bright.
It’s a potential catalyst for the way we structure our finances, the way we work together, and a re-education of how and why we trade.
Once you get into it, you see that communities of inspiring creative people are forming. Building projects and independent platforms, creating, co-creating, and sharing wealth and abundance - educating and shifting our mindset as a society.
It's pretty intuitive, so follow where the research takes you and feels good.
It's not all about the money.
It's about change, revolution, evolution.