Cryptocurrency explained for newbies - like me - Part 1
Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Over the last 6 months I have spoken to a lot of my friends about Steemit. I have signed up many people to the platform and one of the questions that people seem to struggle with is: Where does the money come from? Now to explain this there are quite a few things to say, so let us start at the basics.
What is money?
Money is a medium of exchange. It is a form of trade. A merchant agrees to accept the money in exchange for their goods. Every country has it's own currency with it's own value. The value of money is measured against the exchange rate. In the olden days the value of money was compared to the value of a precious metal - like gold. In other words, you could walk into a mint with X amount of paper money (whichever country) and use the paper money to buy an amount of gold to the value of X amount. Today this has changed. The value of money is influenced by many things.
On Demand and supply and the money market
The value of money is determined by the demand for and supply of money. The money market is an economic model that describes the supply and demand for money in a nation. Consumers and businesses have a demand for money, including cash and checking and savings accounts, and they use financial institutions for this purpose.
One thing that we have to remember is that money only has value, because we believe that it has value. In reality it is a piece of printed paper.
The only reason why money has value to us is because we can exchange it to get something. Nowadays with the crime rate going up, we don't actually use paper money. For example: My salary is paid into my account. On paper I can determine the value in my current currency. I never withdraw any money as I only use internet banking to pay my accounts. When I go to the shop, I buy everything that I need and then swipe my card. This is all done electronically.
Not all countries accept all currencies, so if you want to buy something from South Africa with US dollars you will have to convert the US dollars to South African Rand. The value you will receive is determined by the exchange rate. Today for 1 US dollar you can actually receive 13.37. With cryptocurrency you don't have to convert anything.
So simply put: Money is just a way of payment. Whether you use paper money that you can see and feel, or electronic money the bills still get paid.
This is where cryptocurrency comes in. Cryptocurrency is only a form of digital money. There are various currencies available and it seems like a new one is emerging on a daily basis. Before you can understand where the money actually comes from, you need to watch the following video.
So why don't we just print more money?
What makes cryptocurrency better?
- With cryptocurrency there is a much more predictable inflation rate.
- An online cryptocurrency is not owned or controlled by any government.
- There are no hidden costs. If you pay money from one account to another the only cost will be the exchange fee. If the money is paid into your account it is instantly available.
- Money can be sent and received at any time 24/7. You don't have to wait for the bank to open to go do any business.
- You can make instant payments to anyone, anywhere at anytime.
- There are so many currencies to choose from you can use the one you like best. If you are not satisfied with one currency there is the option to choose another one. Ever heard of bitcoin?
Watch this to see how far technology has brought us. You don't want to miss this opportunity. Don't miss this train. Get on this train while you still have the chance!
Cryptocurrency is the way to financial freedom!
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Nice one! I need to use some of these when talking crypto!
Well even I understand this better now...LOL...I should rename it to crypto for idiots!
Yeah, I've found that everyone is nagged by the "but where does it come from?" question. I usually blow their mind by asking theme where any money they currently use comes from.
Good post. Upvoted
@shayne
Yip, or if I tell them we get paid on steemit they want to know who supplies the money...now I can just give them this link. LOL!
I recognize that. Why has our fiat money (backed my absolutely nothing) has any value at all. No one seems to ever think about that. And our fiat money is nothing more than some worthless piece of paper that they print into infinity. At least cryptos are limited in supply. Difficult to explain that to people.
Good explanation and the videos go into more detail. Thanks for this, I watched both videos!
Great. Excellent videos and it helped me to understand some things better. Thanks for you comment!
Wow ,more information then movies told me
Lol im just kidding
But thanks for the advice
Very useful post again. Let's teach the world about cryptocurrency :)
Resteemed again and tweeted: https://twitter.com/NWOforum/status/859347671018082305
Disclaimer: I am just a bot trying to be helpful.
Thank you, I hope it is useful to someone, but at least I learned something!
That's the nice thing about creating content like this. By diving into the subject you also learn more yourself, helping others to learn along the way.
Nice explanation.
Thank you @eroche this is the only way to wrap my head around this concept. The more I read the more I learn. Definitely the way of the future!!!
Thanks so much for this post, @giantbear ! When I talk to my friends about the cryptocurrencies they look at me as I'm an alien. Your explanation is really clear and it can help me ^_^
Ha ha...I am actually writing this to give to people to read. So tired of explaining and they still don't understand and it is not as if I am the queen of crypto. I am still learning and I discover something new every single day.
As you I discover something new every day about the crypto's world and it's a double excercise for me: study something writing not in my native language (there are just few docs in italian) and study crypto's dynamics :D
I hear you. English is also my second language. Some of the words used in some articles I also don't understand. I usually write about certain things so that I can understand it better in very simplified English.
Some great explanation above and you are absolutely right, you don't want to miss this train!!!
I am actually sitting here waiting for someone to tell me I am an idiot! LOL...the only way for me to learn about crypto is to write about it...
I am the same, it's when I write it down I feel I am getting to know it better!
Nice introduction for newbie, your article can be make an prologue for beginnert to understand the outline of cryptocurrency. :)
I hoped that it made some sense. It took a lot for me to build up the courage to write this post. Never too old to learn.
Learning is important, It make us become more wisely. :)
Thank you... i'm new to Steemit and cryptocurrencies. This artical is very helpful... Understood.
Welcome and good luck. There are some great video out there on YouTube. I am learning something new every day. Very interesting and exciting. Have you checked out vivacoin??? Now that is a currency to follow!!
@vivacoin
i'll take a look at @vivacoin... Thank you.