By: Damian Okonkwo
What is Cryptocurrency
Cryptocurrency is a form of currency that exists digitally or virtually on the blockchain technology and uses cryptography such as wallets to conduct transactions. Crypto currency is a decentralized form of money that lacks government control and regulation. It is often seen as a revolt to the centralized and regulated form of money. Thus the underlying idea behind the founding of cryptocurrency was to fix the problems of traditional currencies by putting the power and responsibility solely in the hands of its holders. All cryptocurrencies usually adhere to the known properties and functions of money.
What is blockchain
A blockchain is an open ledger that records transactions in code form using a mixture of alphabets, numbers and symbols. It is a system of recording information in a way that makes it difficult to encrypt, manipulate, hack, or alter the system. Each block in the chain contains a number of transactions, and once a new transaction occurs on the blockchain, a record of the transaction is added to every participant's ledge.
In order to prevent fraud, each transaction on the blockchain technology is always checked using one of the two main validation techniques known as: proof of work or proof of stake.
Basic use of proof work and proof of stake
Proof of work and proof of stake are the different validation techniques used to verify transactions before they are added to a blockchain. They often confirm that the cryptocurrency is registered on the blockchain before they are sent to the users wallet. Often, Proof of Stake uses randomly the selected miners to validate transactions while Proof of Work uses a competitive validation method to confirm transactions and add new blocks to the blockchain.
Proof of work
Proof of work on the blockchain technology enables cryptocurrency transactions to to be confirmed and recorded without a central authority. Proof of work is a method of verifying transactions on a blockchain which uses an algorithm to resolve the mathematical problem that computers tries to solve within a second. The proof of work serves to disincentivize attacks on a crypto's blockchain by making the verification of transactions quite expensive.
Proof of Stake
Often in order to reduce the amount of power necessary to check transactions, some cryptocurrencies use a proof of stake verification method. With proof of stake, the number of transactions each person can verify is limited by the amount of cryptocurrency theyre willing to “stake,” or temporarily lock up in a communal safe, for the chance to participate in the process.
Advantages of using the Blockchain
· Highly Secure
It uses a digital signature feature to conduct fraud-free transactions making it impossible to corrupt or change the data of an individual by the other users without a specific digital signature.
· Decentralized System
Conventionally, you need the approval of regulatory authorities like a government or bank for transactions; however, with Blockchain, transactions are done with the mutual consensus of users resulting in smoother, safer, and faster transactions.
· Automation Capability
It is programmable and can generate systematic actions, events, and payments automatically when the criteria of the trigger are met.
How can one invest in cryptocurrency
Investing in cryptocurrency means buying bitcoins or any other cryptocurrency often referred to as altcoins from any known exchange while their prices are fairly low, in the hope of hodling them, and to resell when their prices have increased considerably in the long term. Thus cryptocurrency could be seen as an investment which helps to guard against inflation. However, the movement of any cryptocurrency is hardly predictable at each point in time as it is usually influenced by a number of factors.
To invest in Cryptocurrency one can therefore proceed to purchase them on peer-to-peer networks and cryptocurrency exchanges, such as Coinbase, Bitfinex, Kucoin, eToro, Binance, Gemini, Gate.io, Luno, Okex, Mexc Global etc.
African countries where citizens trade cryptocurrency
The following African countries are known to be contributing high trading volumes and liquidity in the different crypto exchange market today:
· Ghana
· Kenya
· Zimbabwe
· Nigeria
· Botswana
· South Africa