blog Personal Finance | 5min Read
Published on November 27, 2021
Imagine creating a payment system as a joke and ending up with a market cap of US$29 billion! Yes, that’s exactly what happened with software engineers Billy Markus and Jackson Palmer after they launched Dogecoin in 2013. It wasn’t until 2021 when Elon Musk vocalized his support towards Dogecoin, that the currency shot up by more than 20,000% in just one year!
If you’ve been seeing a lot of speculation around this but are not sure as to how cryptocurrency works – today’s your day. You will get to know the story behind cryptocurrency and what it means for you.
It is often said that you’re never too young to start saving money. One can start saving after settling down with the family, like your grandfather. Or, one can start saving after launching their first business, like your father. But someone like you can start saving right away – while still in high school.
While the ultimate motto behind saving money has remained the same, the resources from where we get this income and the form in which it has been stored have drastically changed over the past few decades. Cash is no longer the king. With the storming digital revolution, the need and the spread of digital money have seen remarkable growth. So, what is digital currency?
After the COVID-19 pandemic hit, the world has been more rapidly choosing digital money and going cashless. Digital money has brought immense ease of access, but at the cost of cybercrimes. With the world opting for digital transactions, every single day, security has become a major concern. And that’s where blockchain technology and cryptocurrency come into the picture.
What is Cryptocurrency and Why Was It Created?
Just like the dollar, euro, pound, or rupee, cryptocurrency is a digital coin that is used as money in the online medium. This is not physical money that you can pull out of your pocket or fiat currency that the banks can store on their premises. So, where do cryptocurrency, and the transactions made using it, reside? The answer to that is blockchain. Now, what is a blockchain? In simple words, a blockchain network is a ledger or a collection of all digital transactions that take place.
To summarize, you need to observe that physical money is being replaced by digital currency here. Also, all transactions are being done on the backbone of blockchain, which is a decentralized technology. Everyone can access it. No single entity has full control over cryptocurrency which makes it decentralized and hence immune against cyberattacks and sloppy, corrupt transactions. That explains why cryptocurrency was created in the first place.
Types of Cryptocurrencies
Broadly, there are two categories that cryptocurrencies can be divided into – coins and tokens. The major difference between these is that coins have their own blockchain network whereas tokens make use of the existing blockchain.
Bitcoin was the first cryptocurrency, released in 2009, and Satoshi Nakamoto was the developer who created and developed Bitcoin. With the rising demand and growing popularity of Bitcoins, people have created plenty of cryptocurrencies in this digital world. Did you know that there are more than 6,500 cryptocurrencies? This includes Ethereum, Ripple, Polkadot, Stellar, Bitcoin Cash, Chainlink, and yes, the reputed Dogecoin as well. Coins other than Bitcoin are also known as Altcoins.
How Will Crypto Wallets Replace Piggy Banks?
Cryptocurrencies follow a decentralized system, and not a centralized system used in banks and electronic money. Unlike the traditional currencies used in the world, cryptocurrencies aren’t owned by a single country or a person. This transparent technology allows to have more secured transactions and there are not any taxes or transaction charges involved while doing so. You can simply keep your money safe in these crypto wallets, and make use of it whenever required. Although, you cannot make use of cryptocurrency for daily transactions yet, the future surely would have a different story.
Cryptocurrency and Teenagers
Neither the top investors nor anybody else, it’s YOUR pocket money that is growing India’s crypto investments! Yes! The past year has witnessed a huge surge in crypto investments, a huge chunk coming from teenagers. In fact, a survey found that 45% of teens believe they know about cryptocurrency more than their parents. Undoubtedly, the dynamic nature of cryptocurrency makes it a perfect fit for inquisitive young minds.
Not only are teenagers researching and investing in cryptocurrency, but they are also mining their own digital tokens! What is crypto mining? Well, it involves a piece of sophisticated hardware that solves a complex computational problem. In simple words, you can consider crypto mining as a way of creating new coins, as these Texas siblings are doing. Remember we talked about blockchain being a ledger for crypto transactions? A verified crypto miner validates crypto transactions and adds them to the blockchain ledger, thereby earning money from the same.
While Indian crypto exchanges do not allow individuals below the age of 18 to invest yet, won’t it be cool if you could amplify your parents’ or your elder siblings’ investments?
Cryptocurrency is the Future
A decade ago, the concept of flipping your phone, scanning a QR code, and making payments on the go was a fancy dream. Today, it’s an inevitable reality. Innovation often finds itself in the hands of unpredictability.
Believe it or not, cryptocurrencies are here to transform our world and you will soon find yourself in a world that literally runs on them. While there’s still a lot of speculation around the stability of cryptocurrency, the best idea is to start learning about it, before it’s too late. You don’t want to be late to the smart investors’ bandwagon, do you?
The nature of cryptocurrency is volatile but highly rewarding. An investment that yields huge returns is a product of smart decisions and fundamental knowledge. Get your basics right with the Smart Money Camp – a student financial literacy course – and be ready to conquer the world of cryptocurrency. The sooner you start, the greater the edge you have.
The future of your money is in your hands, are you ready to learn?