Disclaimer: This article is solely meant for entertainment purposes and is not professional advice on making investments in cryptocurrencies and NFT. Hence, Infoar will not be responsible for any of your actions after reading it.
The currency that we use now may differ from what our ancestors used. Our future generations may not even use the form of currency that we use now, this is what we call the evolution of currency. You probably have heard about the barter system, which is considered to be the first stage of evolution. Now we are on the verge of the fourth stage moving into the fifth stage, which includes all kinds of digital currencies like crypto and NFTs.
Just think of a scenario where you are selling your 10kg of rice for 1kg of salt to a person in a Merchandise and this process of interchanging commodities is what we call the barter system or the first stage of currency evolution. If any of the traders in this merchandise expresses dissatisfaction, it may end up the trade.
To find a solution to this, the rulers of that period minted coins from gold, silver, and other precious metals that then acted as a medium of exchange for buying commodities. This was then followed by the printing of currency notes, where banks started to play a crucial role in every transaction that took place on the globe. This is the 2nd and 3rd stage, respectively. As everything became online, people started making all their transactions on their mobile phones in just a few clicks with e-banking which is considered to be the 4th stage.
The era of the digitalized currency:
The superiority of the advancement in technology can be even seen in the currency evolution in the form of crypto and NFTs. Cryptocurrencies are something different that doesn’t include coins, paper notes, or any physical assets instead they are completely virtual. That means every transaction takes place on the Internet like e-banking yet they stand distinct from them.
Just assume to be in a situation where you have sent $1000 to my account via e-banking. Here the transaction is recorded by that particular bank in a spreadsheet and is not shown in public. Now just think of all these spreadsheets of different banks and all transactions getting stored in a huge massive spreadsheet that is publicly accessible and is decentralized. This massive spreadsheet is called a ledger.
You might have heard the word crypto mining or bitcoin mining somewhere on seeing YouTube or even while surfing on Internet, So what does it mean?
As the transfer of cryptocurrencies is decentralized, it has to be constantly verified to prevent scamming and other possible threats. So some people devote their entire computer’s power verifying these transactions to what is called “crypto or bitcoin mining.” By doing this, they get some bitcoin as compensation. However, there are millions of bitcoin or crypto miners all over the world who have got the same ledger showing all transactions.
Hence, you may not be able to transfer bitcoins or other cryptocurrencies to others unless you get consent from every single computer on this network to make sure that you have got enough bitcoin to transfer. With so many computers connected containing the exact copy of the ledger, it may be easy to find if something fishy happens.
What is BLOCKCHAIN in cryptocurrency?
This type of virtual currency is named "cryptocurrency" because it is secured by cryptography, and the Blockchain is an example of a way of storing them in blocks. Bitcoin and other major cryptocurrencies use Blockchain technology, which is a secure type of ledger. It is known that a ledger is a record of all transactions. Blockchain is just a secure way of organizing it. All bitcoin or other cryptocurrency transactions that use Blockchain technology are stored in blocks that contain transaction data with a unique hash and a previous hash that contains the data from the previous block.
The problem with cryptocurrencies:
As the concept of cryptocurrency is very new to us, it is not yet considered a form of currency that we use for our regular purposes. Even now, some firms in some countries have accepted payment in the form of cryptocurrency, yet most of them are retracting their decision due to its volatility. For example, Tesla CEO Elon Musk invested a huge sum of money in Bitcoin and even accepted it as a source of payment to buy Tesla cars, but he withdrew his decision due to the abrupt fall of bitcoin value and sold them all back.
As all transactions of cryptocurrency have to be verified innumerable times with lots of computers it would require a huge supply of electricity and that May cause many environmental problems. With neither having policing nor regulation norms this could be even a good platform for criminals or hackers to make money in the wrong way. But actually, this is a misinterpretation where less than 1% of crypto transactions are criminal, whereas 5% of physical money transactions are criminal, yet it is considered to be vulnerable to online thefts. This turns out to be why many people still hesitate to invest in crypto.
There is about 4000 cryptocurrency in this world like bitcoin, Litecoin, Ethereum, Dogecoin, Cardano, etc. But NFT is quite different.
What is an NFT?(Non-Fungible-Token)
Selling a digital art piece is not the same as selling a physical art piece. The probability of people successfully replicating your digital art piece is quite higher than that of someone copying your physical art piece. And NFT is trying to solve this dispute. It uses Blockchain technology to store the data of who owns a digital asset, making the real image authentic.
When you buy an NFT it gives you digital ownership over that asset but you do not have the right to reproduce that image. But still, it will have some value. Even if you own an NFT, it may not prevent people from sharing or making copies of it, but in the ocean of all such copies NFT proves your asset's authenticity.
These cryptocurrencies and NFT show how the Internet influence our lives, hence it is to be understood whatever we do with these things should be done with at most care and to be used wisely.
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