Kenyans, just like many people elsewhere have probably heard about cryptocurrency for way too long already. While opinions remain divided about how futuristic or current cryptocurrencies can be in the financial markets, some fast movers already rake in from crypto trading.
Any ordinary person may struggle to know how exactly cryptocurrency by their different names work; this was the case until Worldcoin, a creation of Sam Altman and his assciates decided to gift subscribers 25 coins worth around Ksh. 7500. Kenyans could not help but rush for the ¨freebie¨ which to them counted well as a temporary rescue from a bad economy.
Perhaps before Altman’s Worldcoin aggresively launched in Kenya, those who mentioned to trade in cryptos were looked at in a certain way. You know Kenyans can be apprehensive about anything that thaye don’t well undertand. Crypto traders in Kenya could as well be considered scammers or something like that. But Worldccoin seemingly used a strategy that roped in even the most reluctant Kenyans into accepting iris scans. To their indignation, the government of Kenya which appear not so sure about the whole process, suspended it. Maybe before it resumes the overdrive to scan the eye for proof of humanhood, its time to be abrest with what cryptos mean and their functioning.
Get more clever, informed about cryptocurrency
Have you been hearing about cryptocurrency and wonder what it is? No more worries. Cryptocurrency is a unique digital payment system that operates without the need for our traditional banks+you got that right, no banks involbed.
Unlike traditional banking where one had to create an account that remains under strict regulations of the bank, cryptos promise to open the space and give users more freedom and create more inclusion. No bank needs to do any verification of transactions when it comes to cryptos.
Worldcoin tokens trigger interest in learning cryptos
Maybe when Worldcoin eventually resumes its operations and gets to reward you with its tokens, the next challenge is how does that become Kenya Shillings to spend on a packet of unga or sugar. No cause for alarm as Worldcoin being a cryotocurrency is listed by crypto exchanges that will allow you to create a wallet and trade on your reward tokens. You literally have the full control and freedom on what exactly to do with the tokens when already in your wallet.
Cyrptos by their design and supported by blockchain technoilogy offers peer to peer transactions. Besides, cryptography secures crypto. This makes it almost impossible to do any monkey business with it like entertaining the temptations of double spending or even counterfeiting.
As much as now we have a new kid in the block-Worldcoin that keeps a rising stature due to its aggressive launch, we’ve had a lot more cryptos already. Bitcoin became the first crypto to hit the market before more and more altcoins started emerging.
Tpday we have many different cryptos including Ethereum, Litecoin, Tezos, EOS, among others. They each have their own advantages and demerits which people need to really get clear before falling for them head over heels. Lots of cryptocurrencies have been introduced in the market after the introduction of the first one (Bitcoin).
The Way Cryptocurrency Works
Although the cryptocurrencies work as a medium of exchange, they rely on blockchain in tracking and recording data. Essentially, Blockchain is a certain kind of public ledger technology. It has blocks and each of the blocks contain data and transactions of the different investors.
In crypto, there are also nodes that manage cryptocurrency. The nodes ensure that everyone involved participates honestly and records the right transactions. The roles of the nodes include archiving historical transactions and recording data.
In describing the nodes, computers can act as an example. For the banks, there are different computers that update balance sheets but data storage is in the same ledger. However, in the case of cryptos, the balance sheets storage takes place in different ledgers. Basically, the copies are distributed on different computers and each node acts as a server
Furthermore, the design of the cryptos makes it difficult to manipulate the system. This is because for you to carry out an attack, one should be controlling 50% plus of the computers which are connected in the blockchain. However, since different people all over the world can purchase cryptos, it is so challenging. Besides, it may be very expensive for an individual.
The Uses of Cryptocurrency
FIrst, cryptocurrency can be used as a currency. You can use it to pay for goods and services. Also, when going for a trip, you might be lucky to find companies that allow you to use it as a form of exchange. The top companies that allow people to pay using cryptos include AT&T Bitdials, and Microsoft.
Secondly, cryptocurrencies can act as a form of investment. In cryptos, you have the option of investing in different types and trading in them. For instance, you can invest in both Ethereum and Bitcoin. It gives the option of investment diversification in a digital way. Besides, some of the top investment funds, banks, and brokerages have been investing in cryptocurrency.
Lastly, crypto is also a store of value. This is because it enhances money flow from one nation to another. The transactions are carried out so fast through the internet. One does not have to wait for days to get the money sent by their friends, loved ones, or famlies.
The Advantages of Cryptocurrency
1. Convenience and ease
Cryptocurrency makes it easy to send and receive funds irrespective of your location. All you need to have is internet connection. It means that you do not have to visit any physical shop to be able to transact.
2. Privacy issues sorted by crypto
The other advantage of cryptocurrency is privacy. This is because when you are transacting, you do not need to provide any personal information. The issue is good because it protects the investor from fraudulent activities and theft. Besides, the government will not know about any of your transactions.
3. Escape from inflation
Inflation does affect lots of businesses all over the world due to decline in currencies. However, one thing that you can be sure of is that cryptocurrency protects one from inflation. For instance, BItcoin has a cap on the amount of coins that can be minted. It is 21 million. Therefore, if demand for Bitcoin increases, the price will eventually go up in keeping up with the market. In the long run, this issue will prevent inflation.
4. Quicker transaction speeds
Moreover, in cryptos, the transaction speed is so fast. The transactions can take place within minutes. Who does not love convenience? When transferring money from one country to another, it may take days in some cases. Thus, cryptos are offering the best solution to the issue. Apart from the transaction speed, cryptos offer cost effective transactions to the investors.
The Disadvantages of Cryptocurrency
As much as cryptocurrencies are beneficial to people, they have their disadvantages.
1. Regulatory gaps
One of them is lack of regulation. The fact that there is a rise in cryptocurrencies means that a lot of money is transacted in an unregulated manner. The sector is raising concerns like cybersecurity, fraud, and tax evasion. Besides, if the cryptocurrencies will be considered as the dominant mode of payment then it might limit the central bank´s ability.
2. High crypto price volatility
Furthermore, cryptocurrencies do suffer from price volatility. The prices of some cryptos such as Bitcoin do shift. For instance, the price of BItcoin dropped in 2022 and no one had expected such. Thus, it inconvenienced a lot of investors.
3. Environmental issues with bitcoin mining
Cryptocurrencies such as Bitcoin cause harm to the environment. According to research conducted by the University of Cambridge, mining of Bitcoin consumes twice as much power as the United States lighting. However, some of the cryptos use less energy.
4. Liquidity risks of crypto
In crypto, there is the challenge of liquidity risk. Some of the cryptocurrencies are traded in small volume. Therefore, the buyers that have high resources can easily manipulate them. The same may happen for the traders who have a stake in a certain currency.