Quidax Logo

Lesson 1:

What is a Cryptocurrency?

The simplest definition of cryptocurrency is “digital money.” It’s not printed (like the Dollar or Naira), and it’s not minted (like the penny or cent). It exists purely on the internet. They use different technologies to make sure that:

No single person controls a cryptocurrency. 
You are in charge of your cryptocurrency.
All records of that currency are properly kept and in most cases cannot be changed.
There is continuous supply and demand for that cryptocurrency.

But what’s the point of cryptocurrencies and why were they created in the first place? Let’s take a walk down memory lane!

After the global financial crisis of 2008, everyone was mad at their governments after they had printed so much money into circulation. So, an anonymous person or entity named Satoshi Nakamoto came up with a new idea for money. And Bitcoin was born.

Fun fact: No one knows who Satoshi Nakamoto is. It could be a person, or even a group of people. 

  • Bitcoin seemed like the perfect currency.
  • No single person or entity controls it
  • It’s easy to use
  • There is demand and supply for it
  • It doesn’t need a bank or middle person for transactions
  • It is relatively secure.

More cryptocurrencies came after Bitcoin And just like that, we’re here dealing with crypto just like we would with normal money. Exciting, no?

Cryptocurrency prices rise and fall quickly so it can be risky to trade. That’s why there are stablecoins.  

Stablecoins maintain a stable price that is tied to something in the real world like the US dollar. Some of the most popular stablecoins are Tether (USDT) and Circle (USDC).

USDT is the largest stablecoin and it works like this: 1 USDT = 1 US dollar

Stablecoins help you do the following: 

Protect your money from inflation. You can protect your local currency by storing it as USDT the same way you can buy dollars 
Protect your money when the crypto market is unstable. You can ‘park’ your money in the form of USDT if you don’t want to lose money when the prices of crypto start falling. 
Send money to people in the form of USDT without the stress of converting to US dollars.