CRYPTOCURRENCY FINANCIAL SERIES

WHAT IS CRYPTOCURRENCY?

A cryptocurrency is a digital cash that is used to transfer value from one person to another in a digital setting or environment. It is internet-based money that is used in buying and selling goods and services.

Cryptocurrency is the same as your bank balance that is tied to your mobile banking app- you can use both cryptocurrency and mobile banking app to send money to your friends, buy things on internet and pay your bills. However, cryptocurrency is different from your money in your mobile banking app in many respects. I will explain these here.

DIFFERENCES BETWEEN CRYPTOCURRENCY AS DIGITAL CASH AND YOUR MOBILE BANKING APP

·        Cryptocurrency is Decentralized while your mobile app cash is centralized. Decentralization means there is no government authority called central bank that controls the amount of the digital cash in circulation. While centralization means there is a central government agency called central bank that controls and regulates the amount of the cash in circulation.

·        The cryptocurrency network is also decentralized such that there are no single computer servers that controls/hosts the network. But your digital banking app depends on a single computer server and its back up servers that are located at the bank head office or data center somewhere. When this computer server shuts down you can not transfer money to your friend again. However, cryptocurrency network is ALWAYS available and can never be shut down since it is not hosted on a single server.

·        In cryptocurrency, you do not need any middleman like bank to come in between you and your friend to enable you transfer money to him/her; it is called PEER -TO-PEER CURRENCY as you can transfer money straight to your friends provided they have cryptocurrency wallet. While in your mobile app digital cash, you need your bank to come in between you and your friend to help you transfer money to them. That is why when you transfer the money your friends may not receive it immediately because your banks have to take your transfer instruction and then process the money to your friends account. In cryptocurrency, you do not need the banks; when you send internet money it goes to your friends straight.

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