Mike Telvi remembers a time when the term “cryptocurrency” was as difficult to decipher as the technology that powers it. The term was so new, in fact, that you could hardly find one in a hundred people who knew what it meant, let alone able to understand the technology behind it.
Thankfully, though, those days are long past, and Mike Telvi couldn’t be more glad. There is no doubt that Bitcoin and other cryptocurrencies are now squarely on their journey to enter into mainstream consciousness.
Still, there are lots of people who do not know about cryptocurrencies, and even more than these in number are people who might have a vague idea as to how these are “virtual money”, but don’t really understand the technology that makes them possible in the first place.
Below Michael Telvi tries his best to explain as simply as possible, what cryptocurrencies are, the technology that powers them, their advantages of conventional money and lots more.
Cryptocurrencies, as the name implies, can be taken to mean currencies that are securely encrypted through cryptography. This would imply that to understand what Cryptocurrencies are, you must first understand the basis of two terms: cryptography, and currency.
So what is cryptography? Cryptography can be defined as a system through which important information is encoded and securely distorted, so that for anyone to “decipher” the content of the information, they would have to possess the necessary apparatus needed for decryption.
Good. Now that we have cryptography out of the way, the next important term is currency. What are currencies? Even simpler. Currencies are widely accepted instruments of exchanging goods and services.
Now that we understand what the two terms are, it isn’t hard anymore to get a clear picture of what cryptocurrencies are:
Cryptocurrencies are widely accepted means of exchange that are secured from theft and other malicious activities through cryptography.
At this point you may have already started to wonder about a couple of things: One, Why do we need cryptography to secure these currencies? And two, which kind of technology exactly do cryptocurrencies employ for their security.
The answer to both these questions, Michael Telvi tells us, can be summarized in just one word: blockchain. What is blockchain? Blockchain is a secured ledger wherein important information is recorded, and safely locked away from manipulation through cryptographic means.
You can think of a bitcoin blockchain as a document wherein every single bitcoin transaction is stored. Now, Michael Telvi says, it is the very fact that this ledger, the blockchain, can not be altered by malicious third parties, that makes them secure.
And why can’t they be altered by malicious third parties? Because they’re locked from manipulation through cryptography.
Imagine if the ledger were available to be edited as anyone sees fit, numerous problems would inevitably arise. You could immediately buy something with your cryptocurrency and edit the ledger to make it look as though you never spent your money, while retaining what you just bought.
Thanks to cryptography, though, this problem, and a host of others, have been successfully averted.
Why Use Cryptocurrencies
Now that we understand the very basis of what cryptocurrencies are, and why they’re so safe and secure, Michael Telvi explains next the importance of cryptocurrencies.
I mean, yes blockchain sounds so awesome and everything, but why should we even use it? Why don’t we just stick to traditional currencies that we’ve all become so familiar with in the first place. Well, Mike Telvi gives you four reasons below why cryptocurrencies are not just fancy and awesome, but important inventions with numerous real world uses.
1. Cryptocurrencies Offer a Decentralized Alternative
Before cryptocurrencies, every single financial transaction you make is tracked and recorded by either an institution or the government. You couldn’t do anything without permission from these bodies.
And given how malicious the banking institution has proven to be in recent times, being the architect of numerous financial crises and repressions, it is no doubt a great idea to figure a way to carry out transactions on our own without their involvement.
And that’s what we’ve managed to achieve with Bitcoin. Thanks to Bitcoin we don’t have to ask for permission from any central body before we carry out transactions. This, in itself, is a huge reason for widespread cryptocurrency adoption.
2. Cryptos Make Monetary Transactions Easier
Apart from being decentralized, safe and secure, there is another appeal to cryptocurrencies that Michael Telvi says can not be exaggerated – and that is the fact that they just make exchanging money easier.
You’d think that exchanging fiat would be an easy affair, and it is to an extent, but only during local transactions. When it comes to transacting over long distances, though, especially across borders, cryptocurrencies offer the most viable alternative right now thanks to their ease, effectiveness, and incredibly reasonable charges.
3. Really Powerful Technology
The blockchain technology, which is the powerhouse behind Bitcoin and other cryptocurrencies, is such a powerful technology with the ability to significantly alter the way we do things – not just financial transactions.
Thanks to its security, decentralization, and permissionless nature, blockchain has the ability to improve our lives in numerous other fields such as medicine, law, gaming, entertainment, you name it!
4. Cryptocurrencies are the Future
Michael Telvi, like many others, believes that cryptocurrencies are the future, and what’s more, he believes that you should make use of cryptocurrencies for this reason.
Now this might seem like a superfluous thing to say, but it actually makes a lot of sense when you think about it. All through history we’ve seen instances of people fighting new technology because they think it wouldn’t amount to anything.
But you know the ones who took the most leverage from it? The ones who saw the vision from the start. Cryptocurrencies are still relatively at their early stages, and it isn’t too late for you to hop on the crypto train. Not only can you attain immense leverage through it, you can also rest assured knowing that when the inevitable future comes, you can look people in the eyes and tell them, “I told you so”.