By Zistus Victor
Cryptocurrency, is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. In other words crypto currency is a digital currency in which transactions are verified and records are maintained by a decentralized system using cryptography rather than a centralized authority.
On the other hand a Blockchain is a digital record of transactions. The name comes from its structure, in which individual records, called blocks, are linked together in a single list, called a sequence. It is basically a ledger that is in a digital form which is distributed and duplicated across whole of the network of the computer systems. This is necessarily understood as Distributed Ledger Technology (DLT). They are used for maintaining the record of transactions made with crypto currencies, like bitcoin, lite coin, etheruum etc that have many other applications.
Now Let's talk about Blockchain Assets:
BLOCKCHAIN (COIN): A coin is a native asset of a particular blockchain. For instance in Nigeria (Naira) is the native medium of transaction, so therefore a coin is the native means of transaction of a particular blockchain.
TYPES OF BLOCKCHAIN
1. Bitcoin Blockchain
2. Etherium Blockchain
3. Solana Blockchain
4. Agron Blockchain
5. Polygon Blockchain
6. Binance Blockchain etc
All these are blockchain and they all have their natives, their native is what we refer to as COIN. It is the primary asset of a blockchain.
▪️Bitcoin (Bit)
▪️ Etherium (Eth)
▪️ Polygon (matix)
▪️ Binance (BNB)
▪️Sulana(Sols).
DIFFERENCE BETWEEN COIN AND TOKEN
A Coin is a native of a blockchain while Tokens are assets that are developed on a blockchain. E.g (Eth) is a coin for Etherium blockchain while a project that is built on a blockchain is called a Token. E.g Shibaino is a type of token.
We would then proceede to what is called Smart Contract.
SMART CONTRACTS: are binding agreement between projects on a blockchain. Smart contract is a computer program that is stored and runs on a decentralized 'trustless' network, such as a blockchain. By trustless we mean that the validity of information in the network can be verified by anyone. A consensus algorithm are set of rules and regulations that binds this two to be in place. Smart Contract are usually not broken i.e they can not be altered since they are set of codes and programmes that are already running. Smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are met.
With this knowledge we shall then moved to Exchange Platforms.
This is a platform where a coin can interact with a token and a token can also interact with a coin. Note that every blockchain has their decentralized platforms. E.g Etherium uses UNISWAP as it's decentralized platform. UNISWAP helps you to change coin to token and token to coin. For instance, Shibaino can be changed to Etherium on UNISWAP and Etherium can be changed to Shibaino on UNISWAP, you only have to pay a transaction fee for the transaction to be completed.
Take another instance, for Binance blockchain, they have what is called PALMCAKE SWAP. Palmcake swap is in charge of all the transactions only on the Binance Blockchain.
TYPES OF TOKENS
▪️PLATFORM TOKENS: UNISWAP has their token called ‘uni’ while PANCAKE SWAP has their token called ‘cake’. The first one is called platform token while the second is called governance token.
▪️ GOVERNANCE TOKEN: The higher the amount of token you own gives you the more leverage to see it on the decision board. The number of Tokens you have gives you the access to make decisions on that particular project and conversely the lesser tokens you have gives you lesser rights to make decisions on the project. Example of this kind of project is called FORUM.
FORUM-X (FTMX) is a governance token and a project that is built on the blockchain of Forum network. That is to say if you have high amount of Forum X you can make decisions on Forum token.
▪️ SECURITY TOKENS: This are tokens where people holds certain percentage of a particular token. For instance, you bought a 200 plot of land for $1000 after 5years the land becomes $100,000 this a pure example of what a security token is.
▪️ UTILITY TOKEN: This is a token that needs to be used for a particular community. For instance if you own a utility token in e-commerce it can only be used on that e-commerce platform, perhaps it can be used to purchase items, to boost page or to carry out some series of activities on that particular community or platform.
BLOCKCHAIN BRIDGE
Blockchain bridge is a solution that helps to connect one blockchain to another. The bridge in blockchain helps to reduce transactions, so I can send Etherium to somebody on Binance blockchain, so the idea of blockchain bridge is just to connect blockchaines together. Solana blockchain can now have Etherium as part of it's token.
For instance somebody from Nigeria traveled down to UK, so when he got to UK, they told him that his Naira is very useful, they have a bridge called Naira-Usdollar to enable him make transactions without converting his Naira to Us dollar. This is a shadow instance of what a blockchain bridge is. Therefore their market worth is the same. This usually enables you to choose the blockchain which have a low cost of sending fee as well as that which has a high sending speed.
▪️ WALLETS: Wallets are highly enscripted platform and space where we Save, Receive and Send All our digital assets either a Coin or token. Examples of wallets are: Trust wallet, Token Pocket for IOS users, Meta Mask, Binance, Luno etc.
Just like your mobile banking app helps you to store electronic assets (money), in the Crypto space is referred to as a wallet.
▪️ DECENTRALIZED WALLETS (DEX): This are wallets that gives you absolute autonomy, you are absolutely in charge of all and every activity done on the wallet, you are in charge of safety and project, your project safety is dependent by on you and you determines what happens to it. There is no central body controlling it for you. Example of decentralized wallet are Trust wallet for Android users and Token Pocket for IOS users.
▪️ CENTRALIZED WALLET (CEX): This are wallets that have a governance system. The safety of this system is being taken away from you, so they are in charge of it, you actually don't have autonomy and decision is not determined by you but a centralized authority.
CLOSING THOUGHTS
Cryptocurrencies act as a hedge against inflation and failing monetary policies and pave the way for groundbreaking innovations and concepts. One of the key advantages of cryptocurrency also lies in its ability to facilitate borderless transactions, which enables the easy movement of value across geographical boundaries. However, it's essential to acknowledge the risks associated with its disruptive potential, including potential loss of investor confidence, challenges for law enforcement, and environmental concerns.
Whether we decide to be optimistic or passimist regarding Cryptocurrency, cryptocurrency would continue to emerge with unique features and objectives that will drive home innovation, efficiency, and transparency in matters of financial concerns.
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