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Cryptocurrency

This is how Cryptocurrency works

Cryptocurrencies are decentralised, encrypted digital assets that may be exchanged over a public ledger and verified through a process known as mining.

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This is how Cryptocurrency works

It’s pretty easy to get lost in the maze of buzzwords and technical terms surrounding cryptocurrencies. Often times, such words get lost in translation even though they needn’t be. “HODL”, for example, could easily be perceived as a direction to huddle up for the next touchdown play in American football. However, it’s a slang to describe the action of holding (going long with) cryptocurrency rather than selling.

Cryptocurrencies are decentralised, encrypted digital assets that may be exchanged over a public ledger and verified through a process known as mining. Cryptocurrency may be likened unto a peer to peer payment system (like PayPal) or a debit card. What this means is that to use a cryptocurrency, you don’t need to understand the technicalities of it anymore than you would need to understand the monetary system to use a debit card. Nevertheless, a deeper understanding of the cryptocurrency and the public ledgers which it is based on, serves to provide even more benefits for the enlightened user of cryptocurrency.

There are several reasons for why cryptocurrency is different from more conventional mediums of economic exchanges. With cryptocurrency, computers execute complex algorithms to make sure that all cryptocurrency transactions on the digital ledger are verifiable, unchangeable, and extra secure from security breaches. This reduces the need for a central source of control over the network which in effect reduces risks of fraud occurring on the ledger.

In conventional economic transactions, a central source of control of the transactions often comes in the form of a middleman. In the case of a cross-border payment from South Africa to Nigeria, this may be a bank. The costs of such transactions tend to be very steep. The World Bank reported that on a global scale, the aggregate cost of sending remittance in 2017 was $30 billion! Cryptocurrency does not require a middleman (like a bank) to be exchanged. This significantly reduces the costs of such transactions.

With cryptocurrency, the person creating the transaction has a wallet which they use to transfer balances from their account (a public address) to another using a private key (password) associated with the account they use for the transfer. You could imagine the wallet as your email, the public address as your email address, and the private key as your password. As with the internet we’re used to, information of the transactions have to be stored somewhere. In the case of cryptocurrency, this somewhere, is a blockchain network, also known as a public ledger. Consider it as a record of transactions.

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The transactions in a cryptocurrency exchange are uploaded to a public ledger which shows the trade volumes and the public addresses of parties to the transactions. What is neat about the ledger is that the identity of the parties to the transactions is not shown, which allows for your right to privacy on the network.

Cryptocurrencies work in similar ways to normal currencies but with even more impressive features and capabilities which are revolutionary. They are optimised by the blockchain to be secure, cheaper (and faster) for the transfer of value, and less susceptible to inflationary risks like fiat currency. With time, they have evolved and will contine to evolve. Currently, they can be programmed to carry out actions which make transactions between parties more transparent which encourages business and user confidence. How does cryptocurrency work? Cryptocurrency works for the good of humanity, one day at a time, one transaction at a time, one new HODLER at a time.


This article is in partnership with Quidax. Quidax is a European based digital assets exchange with a focus on Africa. We provide a seamless platform for users to send, receive, buy and sell cryptocurrencies using their local currencies.

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Cryptocurrency

Ethereum held on Crypto exchanges might run out of supply in 2 days

A crypto expert has released key details on why Ether coins on crypto exchanges could be all gone within 48 hours.

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Ethereum, cryptocurrency, Crypto: Large investors transfer over 700,000 Ethers

The amount of Ethers held on Crypto exchanges could go into extinction amid the high buying pressure seen in recent days.

Alex Saunders, a crypto expert, via Twitter, released key details on why Ether coins on Crypto exchanges could be all gone within 48 hours amid high buying pressure.

READ: Crypto: Financial market that never sleeps, or is under any central authority

  • “Crypto Exchanges could be out of Ether within 48 hours. Demand has sky rocketed. Exchange reserves fell 20% from 10 million to 8 million in the last few hours. With targets of $5k, $10k & $20k long term, I doubt many HODLers will sell their ETH in the $1-2k range”

READ: Why Ethereum could make you rich

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Ether reserves held on crypto exchanges have not been this low for about two and a half years ago. At press time, just 7% of Ether’s circulating supply is presently held on Crypto exchanges.

Meanwhile, Crypto investors are buying into the world’s acclaimed utility crypto, over owning a stake in Ether amid the boom seen recently in Crypto markets. Although it has not been strange to many crypto experts in the crypto-verse, seeing Ethereum demand at a record high.

READ: Hackers, expose crypto wallets worth $150 million at Kucoin

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Recent data obtained from Glassnode, a crypto analytic firm revealed a number of  Ethereum based addresses holding 0.01+ coins just reached an all-time high of 10,997,708.

The previous all-time high of 10,997,003 was observed earlier today.

Metric description: The number of unique addresses holding at least 0.01 coins. Only Externally Owned Addresses (EOAs) are counted, contracts are excluded.

READ: U.S Central Bank leader says no rush into crypto dollar

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What you should know

  • At the time of drafting this report, Ether traded at $1,219.35 with a daily trading volume of $34.1 billion. Ethereum is up 11.13% for the day. The world’s leading utility has a market value of $139.3 Billion.
  • Breaking the $1,300 resistance level represents a dramatic shift for Ethereum, which stood at around the $112 price level in March 2020 following the market carnage that occurred as a result of the ravaging COVID-19 virus.
  • Ethereum is a decentralized system, fully independent, and is not under anybody’s authority. It has no pivotal point, and its platform is connected to thousands of its users through their computing system around the world, which means it’s almost impossible for Ethereum to go offline.

READ: WhatsApp to share users’ personal information with Facebook

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Cryptocurrency

U.S Central Bank leader says no rush into crypto dollar

Jerome Powell recently spoke on why the U.S central bank had no reason to rush into central bank digital currencies.

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The world’s most powerful monetary policy chief, Jerome Powell, recently spoke on why the U.S central bank had no reason to rush into central bank digital currencies.

In a YouTube webinar organised by Yahoo Finance and conducted by highly revered economist, Markus Brunnermeier, the U.S Fed Reserve Chairman stated that the US central bank desires to get it right and hence doesn’t feel an urge or need to be the first.

READ: Central banks digital currencies pose a threat against the U.S dollar

“Since we are the world’s reserve currency, we actually think we need to get this right, and we don’t feel an urge or need to be first,” he said. “We effectively already have a first-mover advantage, because we’re the reserve currency.”

Powell also revealed that stablecoins were of high-level priority.

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READ: Crypto usage absolutely certain – Standard Chartered

“We’ve been very focused… on potential regulatory answers for global stablecoins, in particular,” said Powell in response to a question about CBDCs, or central bank digital currencies.

“So that’s been a high-level focus, and that will continue to be a high-level focus because they could become systemically important overnight and we don’t begin to have, you know, our arms around the potential risks and how to manage those risks, and the public will expect we do and has every right to expect that… It’s a very high priority.”

READ: Gold prices up on U.S Central Bank’s will to keep interest rates low

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Recall many months ago, the world’s largest economy considered the use of digital dollars, following slow COVID-19 stimulus payments to its citizens. The U.S Congress recently heard testimonies on the usage of digital dollars to facilitate the U.S’ legacy financial infrastructure.

Just yesterday, America’s Congressional Fintech Task Force examined Federation Accounts and the use of digital dollars in expanding financial reach in the United States.

READ: Naira gains at NAFEX window as CBN squashes early devaluation thoughts

What you need to know about Digital Dollar: The U.S government considered a framework in creating a U.S. central bank digital currency, which would be mined through the blockchain protocol, transferred between users, and recorded in a public ledger.

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  • The digital dollars would be stored in a distributed database via the internet, on an electronic computer database, within a stored-value card or virtual files.

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Cryptocurrency

Betting on Bitcoin is better than investing in PayPal, Google, Facebook, Amazon

MicroStrategy CEO has disclosed why betting with Bitcoin is much better than investing in leading technology brands.

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BTC Whales, Bitcoin is scarce, entities, individuals hold for long term, How Cryptocurrency-Based Companies Like Patricia are Shaping the Digital Currency Market in Nigeria, How Bitcoin Comes in Handy in Moments of Uncertainty

Michael Saylor, CEO of MicroStrategy, in a recent Youtube interview with Chris Jaszczynski of MMCrypto, revealed why betting with Bitcoin is much better than investing in leading technology brands.

Saylor has been very vocal about Bitcoin and its potentials since his company gained exposure late last year. It is worth stating that MicroStrategy was the first public-listed company to purchase Bitcoin as part of its treasury policy.

READ: $100 billion wiped in crypto market amid profit taking

  • “I’ve invested in everything. I was an early investor in Apple, Facebook, Amazon, Google, OpenTable, eBay, and PayPal. I made huge amounts of money. I made 10x, 20x my money in those things, and let me tell you, none of them looks as good as this looks to me.”

The basis for such bias is based on the record inflows of funds comprising of “cash, debt, equities, [and] commercial real estate indices,” that are expected to shift at one point into Bitcoin.

READ: Bitcoin hits $41,000 and Nigeria’s first micro-investing platform, Trove, adds cryptocurrency trading

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The highly revered Chief Executive Officer of America’s leading business intelligence company further added that $300-$400 trillion could flow into the world’s flagship crypto.

This is nearly 60 times the prediction of $600 billion that was given by the world’s most valuable bank, JP Morgan Chase.

READ: Google, Facebook, Twitter stocks drop, investors ponder if big techs have become too powerful

What you should know

  • MicroStrategy is listed on an American Stock exchange and has deployed about $250 million into Bitcoin in August and then added $175 million a month after.
  • These two investments represented the first and second time a publicly-traded corporation bought Bitcoin for investment purposes.
  • MicroStrategy increased its buying pressure subsequently by investing an additional $50 million and even going as far as to raise $650 million in the debt market.
  • By the end of 2020, MicroStrategy had confirmed it had spent $1.125 billion to purchase 70,470 bitcoin, implying a cost basis of $15,964 per Bitcoin.

READ: Bitcoin jumpstarts strongly, daily trading volume hits $25 billion

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