Thread by @cryptobafemi

𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝗖𝗿𝘆𝗽𝘁𝗼 𝗖𝘂𝗿𝗿𝗲𝗻𝗰𝗶𝗲𝘀? - A Thread🧵

[#Cryptocurrency explained to you like a 7-year old]

👇Read Carefully

-Cryptocurrencies are virtual or digital currencies with no physical form of paper money or commodity with which it is backed.

Humans from the beginning of time have always involved themselves in some form of trade or the other.

-It started with the barter system and then progressed to the use of objects such as stones and wood as a form of exchange.
- Then we progressed to the use of non perishable commodity such as #Gold and Silver as a form of currency.

As countries and government began to form, we began to seek a more simpler form of money which led to #TheGoldStandard [Existence of Paper Money Backed by Gold]

August 15, 1971. The #USA government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard.

This changed the view of paper money has it didn't have much value apart from what the government says is it's value.

Fast forward to today, we now have digital payments done digitally via PayPal, Card, Bank Applications and then Cryptocurrencies.

- Crypto Currencies are digital currencies that operate without a Central government controlling it.

But overtime it has evolved from just being currencies to assets.

So we have #cryptocurrencies that function as money, while some functions as assets.

Just like stocks, art,

and collectibles.

-Cryptos are built on a technology called blockchain.

What is a #blockchain ?

It is a data structure that allows digital ledgers of transactions to be shared among different networks.

- For example in banks we have transactions inputted in a ledger and the ledger is held by different computers.

#blockchain makes it public and allows everyone to see the data

Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.

A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

So instead of having a central authority like a bank oversee transactions, it is decentralised.

So why are Cryptocurrencies very volatile?
Unlike physical commodities like gold and silver, Bitcoin is entirely digital which makes it hard to determine its value.
-They are only numbers on a screen.
𝗗𝗲𝗺𝗮𝗻𝗱 𝘃𝘀 𝗦𝘂𝗽𝗽𝗹𝘆📈📉
Every cryptocurrency has a fixed supply;

-Crypto currency value are measured against the dollar based on the buy and sell ratio.

-The more people buy, the more the price increases.
-The more HODLers sell, the more the price reduces.

𝗠𝗲𝗱𝗶𝗮 𝗖𝗼𝘃𝗲𝗿𝗮𝗴𝗲 𝗮𝗻𝗱 𝗛𝘆𝗽𝗲

Ever heard a Crypto go 1000% high in a day. It's because of media hype people jump such projects making them to rise (mooning 📈)

𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀

Unlike traditional currencies, commodities and stocks. There's little regulation in the crypto market.

Alot of Cryptocurrency coins and tokens are created everyday as a result of this making the market so volatile.

So that's all for now.

Will be making a thread on "Types of Crypto Currencies" next.

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