Imagine you are in a supermarket line, with your trolley full, ready to make payment for your goods. You swipe your card and it gets declined. You think it's a mistake, you swipe again, and it gets declined. You tell the cashier, maybe it's a problem with the PoS machine. The cashier gets you another PoS. You swipe and it gets declined the third time. You’re now convinced the problem is with your card or bank. The customer behind you says, maybe you could try cryptocurrency so that you don't hold the line next time. You ask, what is cryptocurrency?
Cryptocurrency is a virtual or digital currency that works on blockchain technology. It is designed to work as a medium of exchange online to buy goods, services and make payments.
It sounds similar to other online payments such as Paypal and Google Pay. So what makes it different from other online modes of payment? Cryptocurrency is decentralized and free from any third-party interference. Therefore, it is not issued or controlled by any central government or authority.
Now, there could be many reasons why your transaction failed earlier on in the supermarket line. Maybe there was a technical issue with the bank servers, which was not communicated. Or maybe you had exceeded your transaction limits and were not aware. Or probably your account had been hacked. Or most likely, there were high transaction fees imposed by the bank, and this led to insufficient funds on your card.
Cryptocurrency solves all these issues. First of all, crypto charges low to no costs on every transaction. This is an attractive feature for cryptocurrencies because banks and other payment modes have always charged an arm and a leg for every transaction. When dealing with cryptocurrencies, there is no limit on making transactions. In fact, you have full-time access to your funds. Low-cost transactions apply even when making international transfers, and it gets better because there is no limit to making international transfers. Perhaps the most exciting part is that anybody can use cryptocurrency. There is no paperwork involved and all you need to create an account on any trusted digital wallet of cryptocurrency.
Cryptocurrency seems to solve all the supposed bottlenecks caused by other modes of payments. You must be wondering how cryptocurrency does this and yet operates seamlessly without the control of a central authority. Well, cryptocurrency works on blockchain technology.
Blockchain is a set of blocks that record information about transactions. An example of information recorded is who made what transaction to whom. This information is recorded on a digital ledger, that is distributed across the entire blockchain network. A ledger is a book or a collection of financial accounts. A digital ledger refers to a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. This means information about transactions in the blockchain is replicated and stored across the entire blockchain network. This process of information storage makes it extremely secure, and impossible to cheat or hack the system.
“Crypto” in cryptocurrency stands for cryptography. Cryptography is a method of using encryption and decryption to secure user data in case of the presence of any third parties (hackers) with ulterior motives. It is essentially the process of securing inside communication from outside observers.
Cryptocurrency continues to influence millions of people around the world. Financial companies are waking up to the idea of incorporating cryptocurrencies into their systems. Banking giants such as Standard Chartered, Barclays, and Goldman Sachs are gradually embracing blockchain technology. World-leading entrepreneurs such as Elon Musk CEO of Tesla, and Bill Gates, Co-founder of Microsoft, support cryptocurrency, because it is a secure option compared to other modes of finances, and promises a better future for the world economy. However, other leading entrepreneurs such as the CEO of Backshire Hathaway, Warren Buffet, disapprove of bitcoin ad believe cryptocurrency is a platform of criminal activities set to destroy the world’s economy.
Cryptocurrency is redefining banking and finance globally. Operating on blockchain technology, cryptocurrency is extremely secure, fast, and cost-effective. Cryptocurrency has brought financial solutions to anyone with a digital device and internet connection. Anyone with these two can spend money, trade, and even borrow, and no central authority will step on their dreams.
Sankore 2.0 is an Africa-focused community integrating the NEAR blockchain with projects and solutions conceived and built by local developers in Kenya. As noted in the content of this blog, Sankore 2.0 seeks to promote the development of Web3 products in Nairobi — for Kenya and for Africa as a whole.