What is Cryptocurrency?

by discord group Marketing – Vack

 

You might be asking yourself a few questions when researching what Ohm, Bitcoin, and all the other dozens of “alt-coins” that exist out there.

  • What is cryptocurrency?
  • How does a cryptocurrency have value?
  • How do I start trading cryptocurrency?
  • Why should I invest in Ohm?

We’ll go through and answer these questions for you, so that you can get a better idea of what cryptocurrency is based on, and where the future might be going.

 

What is cryptocurrency?

First, let’s look at a quick explanation of how a cryptocurrency, like Bitcoin, essentially works:

Exactly as the above chart says (shout out to Blockgeeks), a cryptocurrency is simply a medium of exchange that exists completely in the digital world. The transactions that you request are verified several (sometimes hundreds) of times by “nodes” of the networks (this is called “mining” in the world of Bitcoin), and is added to an unalterable history of transactions. This ensures it is safe, secure, and impossible to fake a transaction.

Cryptocurrency is important in one major way because it is a decentralized currency. In short, no one government entity or group of people control it, but it is truly controlled by the people that use it. Centralized currency has had a multitude of problems for the people in history:

  • On 8 November 2016, the Government of India announced the demonetization of all ₹500 and ₹1,000 banknotes, crushing those who had stored all their money in the value of those two bills. Bitcoin can never be demonetized because no one entity makes the rules for it.
  • Executive Order 6102 is a United States presidential executive order signed on April 5, 1933, by President Franklin D. Roosevelt “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States”. Since Bitcoin is decentralized and not on the gold standard, it’s value can’t be defined by the government in this way.
  • The government decides when to print more money (or less) to maintain the rate of inflation. In bitcoin, coins are handed out when miners verify transactions, an automatic system that isn’t decided by the 1%.

Another great benefit to cryptocurrency is that all the transactions are anonymous. In this decentralized network, your identity is not tied to the transaction ledger as described in the infographic above. While some have taken this liberty of anonymity to do mischievous things on what is known as the Darknet, do not let that make you think this is illegal in any way. Anonymity is a personal liberty and all of cryptocurrency is legal (except in Bolivia, Ecuador, Kyrgyzstan, and Bangladesh), so don’t have any fear when entering this world.

How does a cryptocurrency have value?

 

Cryptocurrency’s value is a combination of supply/demand, and… actually, that’s pretty much it. Bitcoin is the most popular coin, so we’ll use that as our example. There is a cap at 21 million bitcoins that can be produced through mining, so this limited supply, combined with the popular demand, creates value. If someone is willing to sell a bitcoin at $5, and everyone else starts selling it at $5, then the value would drop to $5. The value that you see is simply the meeting point between the lowest most people are willing to sell at, and the highest most people are willing to buy at. This fluctuates tremendously with large currencies like Bitcoin, and sometimes more so with smaller currencies (alt-coins).

Another factor adding to the value of bitcoin is that people are losing them. Once you buy bitcoin, you can save it to your computer, or leave it in an online wallet. If you throw your computer away or forget your password, you have lowered the supply of total bitcoin in the market, and the value will go up to compensate for the supply going down. It’s estimated that 30% of all current existing bitcoins have been lost forever (You can read more here https://goo.gl/cgwpye), an incredible amount that is only going to increase through the years.

An advantage that cryptocurrencies have that complements this idea very well is that they can be fragmented into incredibly small pieces. 1 Satoshi is the name given to .00000001 of a Bitcoin, and is used very often in recent years since the value of bitcoin has raised so tremendously.

How do I start trading cryptocurrency?

 

The two most popular websites to get started on would be coinbase.com and localbitcoins.com.

Coinbase is a very safe and secure method to directly by bitcoins from a price that they give you. It is a fair price, albeit they charge between 1.5-4% fees when you buy or sell. This is a great, secure, and safe method for newcomers in the cryptocurrency market to buy Bitcoin, Ethereum, or Litecoin.

The other method, localbitcoins.com, is much less secure, but doesn’t require all the personal information that Coinbase does. Here, you buy directly from other people throughout the world directly using whatever method they request. This can be Amazon gift cards, mailed cash, or even bank wire transfers. This is much less secure but, if you’re really a stickler for privacy, an option for you.

After you get your hand on some coins, now it’s time to hit the exchanges! Some of the most popular coin exchanges are Poloniex, YoBit, and Bitsquare. Here you can exchange between cryptocurrencies on the hopes of buying low and selling high to make a profit.

Why should I invest in Ohm?

 

To be honest, there are a lot of alt-coins out there. Ohm may seem like it gets lost to the crowd at first glance, but behind this coin are pure intentions that not only want to fix some of the problems with other currencies, but also want to proactively improve the world.

In Bitcoin mining, an incredible amount of energy is used. These computers stay on, 24/7, cracking math problems that would take humans years to do by hand, and is very harsh on the environment. According to a bitcoin mining-farm operator, energy consumption totaled 240kWh per bitcoin in 2014 (the equivalent of 16 gallons of gasoline). This system has been called Proof-Of-Work, and is a polar opposite to the method that Ohm has implemented, Proof-Of-Stake. When your wallet is “minting” (as opposed to bitcoin mining), you are randomly selected by the network based on the amount and age of your Ohm to create the block to be added to the ledger, and you collect the transaction fees. This is much more energy efficient, and the transaction fees are much lower compared to Bitcoin today, which is around $2 every transaction.

We are going to be honest with you- Minting is for those who have a considerable amount of Ohm. In your first year of minting, you will earn 20% of what you currently have in your wallet. These minting rewards are spread out across the entire year, so minting with a bit of Ohm will only bring rewards every week or maybe less often. It is a much more profitable and rewarding to trade on the exchanges to increase your amount of Ohm, and mint on the side. If you’re looking for an answer to the question of “How much do I need for it to be worth minting?”, look at if you’d be happy earning 20% of what you currently have per year. If it’s enough, great! If not, move to the exchanges, and try moving it around there.

Other Great Ways to Collect Ohm

 

To improve the world, they have created the L.A.M.B. program, in assistance with the SVV. You can submit your acts of kindness in exchange for Ohm – through this program, we hope to inspire over one million acts of kindness. You can get the link to this here: http://lamb.humanisbeing.com/. This is the bridge to our partners, the Sodalitas Vulturis Volantis. If this interest you, Apply and start playing the game that you never thought that you would; most importantly, improving humanity.

This ARG (Alternate Reality Game) has a heavy theme on improving the world through self-improvement and selfless acts. This complemented our goals very well and, as such, we are co-dependent. Their members, which are numerous and worldwide, earn Ohm by “Simply Being”- contributing to the community allows members to remain, and by being a member, you earn Ohm collectively every time someone does an Act of Kindness.

Hopefully, this cleared up quite a bit for those of you still on the fence about whether Ohm, or any crypto currency, is right for you. Look around, the internet and digital transaction are still I their infancy stage to the world of the web. This is the beginning of the future.

Sources:

 

 

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