What is Cryptocurrency and the Development of Digital Currency in Nigeria
Today's payment transaction tools have undergone many developments. By buying products over the internet, you can buy them without having to use paper currency. Cryptocurrency is one of the digital currency assets that serves as a solution to the needs of today's online financial transactions.
Well, for those of you who still don't know what cryptocurrency is, in this article we will discuss more deeply about the meaning, functions, types, and how this digital currency works. First, we will discuss the true definition of cryptocurrency.

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What is Cryptocurrency

Crypto currency or cryptocurrency is a digital asset which is understood as digital currency. This currency is very different from the conventional version, where cryptocurrency is used for virtual transactions over the internet. 

This currency is decentralized, which means that no one party is intermediary in a transaction. So, payments take place on a peer-to-peer basis, which means they are made between the sender and receiver directly. In addition, all transactions will be recorded through a system that is already available with optimal security. 

Because it is decentralized, cryptocurrency requires sophisticated and capable computer specifications. In general, they will use a blockchain platform to make transactions easier. 

Function of Cryptocurrency

Next, we enter the topic of the function of virtual currencies. Here we have divided into three kinds of functions related to human activities today.

1. Investment

The principle of this cryptocurrency is the same as the principle of economics, where the price will rise when there is a lot of demand. The more people who invest, the prices will also soar. However, this investment is included in the high risk category. 

2. Buying Goods or Services

For now, there are many companies or organizations that have implemented payment tools using virtual currencies, both from hotels, airlines, restaurants, to applications. At least, there are two companies that have used this transaction tool, namely Overstock and Newegg. However, most companies only accept bitcoins.

3. Mining (Mining)

Mining is something that is closely related to cryptocurrencies. Users must be able to solve complex cryptographic puzzles to be able to confirm transactions and record them on a blockchain. The greater the power of the user, the greater the chance of being able to solve it.

Types of Cryptocurrencies

The following are different types of cryptocurrencies that are often used in various countries as an online transaction tool.

1. Bitcoin

Bitcoin is a type of cryptocurrency that was first used and is very popular until now. Bitcoin first appeared in 2009 by a party named Satoshi Nakamoto. As of November 2019, there were more than 18 million bitcoins traded with a total market value of around US$146 Billion. To date, about 68% of cryptocurrencies are a type of bitcoin.

2. BitcoinCash

BitcoinCash was first launched in August 2017. This type was launched because, there are a number of bitcoin user groups who do not agree with the applicable rules. They broke away from bitcoin and improvised on this new digital currency, claiming that bitcoincash was better than bitcoin.

3. Dogecoin

Dogecoin itself is a derivative of Litecoin which was first introduced in December 2013. As the name implies, Dogecoin uses the Shiba Inu dog as its mascot. Dogecoin is one of the friendliest cryptocurrencies, because there are so many communities that do charity, donate, and other positive activities. In addition, dogecoin also has a lower value than bitcoin.

4. Litecoin

Litecoin was introduced in 2011 as a peer-to-peer (P2P) digital currency that generates new blocks at a faster rate. Litecoin also possible to conduct transactions quickly without the need for a powerful computing system. 

Advantages and Disadvantages of Cryptocurrencies

1. Advantages

Here are some of the advantages possessed by cryptocurrencies.

  • Universal

Everyone can use cryptocurrency without any binding regulations and conditions.

  • Transparent

With digital currency, each user can see various transaction activities that have been carried out. Of course, this transparency also has a limit where you can't see the person who made the transaction. 

  • Have control over personal

That is, each user will be responsible for their respective currencies.

  • Fast and accurate

Finally, transactions using virtual currencies are very fast when compared to transactions through banks.

2. Disadvantages

The following are some of the disadvantages of using virtual-based currencies.

  • Not yet fully licensed

In some countries still do not allow this currency and is still considered illegal. Thus, for some countries, cryptocurrencies do not act as legal tender online.

  • Used for illegal transactions

Many people take advantage of cryptocurrencies for criminal purposes. They can carry out transactions illegally without being noticed by exploiting loopholes in the cryptographic code. 

  • Password system

If you do not memorize or you forget your password, it will be very easy to lose money on the account that has been created.
Harbyj | Author

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