Our lunch time talks in the DollarsAndSense usually revolve around financial topics. This ranges from property investment, insurance and, of course, Partner issues.
With cryptocurrencies being heated in recent months, it is not surprising that more and more people get curious about it. While the buzz surrounding the cryptocurrencies have brought a lot of investors and traders not everyone understands the dynamics of how cryptocurrencies work, and most importantly, the factors that will make sustainable development work in the digital world.
What exactly is a Cryptocurrency?
Basically, cryptocurrencies refer to the digital currency. This is money that is entirely created, transaction, stored on the internet.
Unlike paper currency, which is legal tender issued subsidized by the local government that issues (such as the dollar, euro, SGD), the cryptocurrencies are not issued by any government. And then cryptocurrencies considered a kind of decentralization in the water, means it is not owned or controlled by any government.
Understand how Cryptocurrencies work
To better understand this, let’s first look at how regular currency.
In Singapore, we primarily use the Singapore dollar. It’s legal tender accepting transactions in Singapore. We can carry physical cash with us, or stored in Singapore dollars in our bank accounts to make transactions.
When we were cashless payment using a method such as nets or EZ-Link, the amount we spend is deducted directly from your bank account or stored value in the prepaid card to the retailer. This is done electronically with no physical cash exchanged.
Cryptocurrencies work in a similar way to the money in your bank account. It seems as many in the cryptocurrency digital wallet we can’t carry on like I carry cash. However, this depends on how accepting Bitcoin, we can use it to pay for products or services that we purchase, both online and offline.
The ability to pay the purchase price is an important feature of cryptocurrencies that investors and traders should not be ignored.
Money as means of payment
Whether it is in paper currency, commodity money, or cryptocurrency, the most universally accepted type of currency is more valuable naturally.
Let’s take shell money as an example. For those of you who may not be aware of shell money (i.e. sea shells) were commonly used as a method of payment in many parts of the world.
Imagine if we were to go back to those old days. Suddenly a few pieces of honesty you can buy a meal in the hawker center used to pay for taxi rides and even buy a HDB flat.
It is clear that if we accept it as means of payment today, honesty will instantly become valuable. You will see people rushing to the beach “me” this accident, just like how people mine Bitcoin and Ethereum.
But the extent of the rise of the value of certain types of cryptocurrencies lies in accepting it as a payment method. In recent years, Bitcoin has started gaining acceptance of payment method for many major brands such as Expedia, Microsoft and Dell.
Blockchain technology plays a big role in the cryptocurrency. It is not easy to understand how the blockchain technology works, so the best way to explain the use of measurement.