Here’re the essential features of Cryptocurrencies you should Know

By now, there is a high possibility that you already know what Cryptocurrencies are and what they are used for. You’ve probably even used one, or currently contemplating which one to buy next. There is also the possibility that you are just hearing about Cryptocurrencies for the first time. Whatever the level of your understanding, this article is relevant to you.

Do you know that there are more than 2,000 different Cryptocurrencies in the world? Do you know the differences and the features that make each of them unique? Well, let’s discuss

Cryptocurrencies are Virtual

This is the most obvious feature of Cryptocurrencies everyone should know. Consider them the same way you think of the internet – they are right there in the clouds and very valuable. But you cannot see or touch them. This is  because Cryptocurrencies are virtual currencies, meaning that they serve the same purpose as your naira or the US dollars, even though you cannot see them. In 2012, the European Central Bank defined virtual currencies as “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.”

Cryptocurrencies are Anonymous

When you are transacting on a blockchain, everything is anonymous. This is because the two parties involved in the transaction (the sender and the receiver) both have a unique set of characters (public key) which they can use to ensure that neither party knows who the other person is. This feature is very important, especially for those who are concerned about protecting their online transaction history.

There is no Central Regulation

Many Crypto experts portray this as the most distinctive feature of Cryptocurrencies when compared to regular currencies such as the naira. For fiat currencies (i.e., the naira etc.), it is usually the Central Bank of Nigeria and other financial institutions that give it the value it has. Your ability to use a piece of paper to pay for something is only because the government has placed some value on that piece of paper.

Cryptocurrencies, on the other hand, are peer-to-peer. Its creation is regulated by the blockchain and eliminates control by a central party.

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Cryptocurrencies are Immutable

Cryptocurrency transactions cannot be reversed. When a transaction occurs on the cryptocurrency network, it is recorded on the blockchain. For it to be reversed, it would mean that most nodes (think of these as computers) in the blockchain need be altered. Which is an impossible feat to accomplish.

It can only be Spent once

You can only spend a Cryptocurrency once. In other words, it is impossible to spend one Bitcoin or one Ethereum twice or thrice with various users in an attempt to purchase an item. The advantage here is that it eliminates the possibility of double-spending.

Cryptocurrencies make for instant transactions

When you are transacting with a Cryptocurrency, your transaction will be processed quite instantly, irrespective of where you are transacting from.

It is important to note that Cryptocurrency has nothing to do with Ponzi schemes. The technology is very transparent and was created with the intention of revolutionising the global financial system.