What Is Digital Money – Cryptocurrency For Beginners
Hello and welcome to Generate Wealth Forever.
We all know that this day and age is about digital and making money online. You have probably heard the term digital money, but you are here because you want to know “what is digital money”?
This article will explain what digital money is, how it’s used, and the technology behind it. Don’t worry; I’m not going to use big words when explaining this as I don’t want you to get confused as I was when I first learned about it.
So let’s jump into this, and first, I want to explain…..
Table of Contents
What is Digital Money
When you think, about digital money, what comes to mind first?
I think of the money that is on the computer that is used on the internet. Something that is not tangible but virtual. Now you wouldn’t be wrong thinking this way, but it is much more than that.
You might hear about Bitcoin and that it is digital money, You hear about people getting rich with bitcoin, but it confuses you how something that is made from nothing is worth something. I will explain this in more detail below. For right now, I will explain digital money.
Digital money is like Fiat (government currency). It holds value like fiat. It can be spent like fiat; you can save it and collect interest like fiat. But unlike fiat or cash, you can’t hold it in your hand. It is an internet-based currency, but that is just the beginning of what it is.
History Of Money
Money has come a long way since the beginning of time.
In the beginning, when there was no money, people would take what they wanted, and if you owned it first, then you would have to fight to keep it, sometimes this would end in death. It wasn’t long before people started to barter with each other by making trades for things they wanted or needed, and in return, they gave something the other person wanted. This was more civilized.
When civilized society came into the world, money was invented. Money-back then was gold and silver. The value was held because gold looks pretty. The metal was shiny and heavier than it looked and therefore had value. It wasn’t until much later that gold and silver became useful. And when it became useful, then the value increased.
When kings and queens ruled the earth, they made gold and silver into coins for use in trade. If you had nothing to barter with, you could use money as a form of trade. This is how money started and progressed from there.
Through the years, gold and silver were used the most for money, but when the metals’ uses increased, other metals were introduced to make the coins, from Nickel, copper, steel etc. This was the main form of currency for many years until royalty (kings and queens) turned into governments.
At first, governments used the coins but then came out with paper money. As people got richer, the weight of the coins got heavier, and therefore people needed a way to hold more money without the sheer weight of the currency. Banks were formed where you could keep your heavy coins but there needed to be a solution. This was when paper money was invented. Paper was a fraction of the weight of gold, silver and other metals.
The government started to trade people gold certificates in place for their gold coins. This was a way for someone to carry several pounds worth of gold without the weight. People could then use the gold certificates to trade for other things, and if they wanted their gold back, they could return the certificate to the government in exchange for gold.
This went on for many years until the governments started printing their own money and telling people that the paper holds its value because there was a reserve that held the gold that backed up the money. Let’s said that one ounce of gold was equal to a 1 dollar bill. This is how the government was able to hold the values. But over the years, the governments started printing more money than they had gold, which is when the value of the dollar started to go down.
With the decrease of the value of the paper money came inflation. The easy explanation of inflation is that one ounce of gold is equal to 1 dollar, as per the example above. When another dollar is printed without gold backing it up, the 1 dollar vs one ounce of gold is now equal to 2 dollars for one ounce of gold. The difference is called inflation.
As the government printed more money, the value of the dollar went down. To give you an idea of how low the dollar is today, an ounce of gold is worth $1600. So when the government prints more money, the less you get when you barter for something.
Around the mid-1900s, credit was formed. The credit card was born. I don’t need to explain the credit card to you as most already know what it is. Around the same time, computers were invented, and this started the next era of currency.
With computers in the picture, people could store their money on a computer in a bank. You were issued a plastic card that held a balance of how much money you had in the bank. Now you were able to withdraw cash from the bank or use your card to make transactions. The debit card was born.
With the debit card, you didn’t need to carry money anymore and could use your card to make a purchase (barter), But you still had a choice on whether or not to pay with cash or debit. Many people like cash still because cash can’t be traced, but with a debit card, the bank knew how you spend your money and therefore, so did the government. Many people don’t like this.
One day sometime around 2010, someone invented Bitcoin, and Cryptocurrency was born. Cryptocurrency is a digital dollar that holds its value just like gold did in the early 1900s. There is only a limited supply. (like my explanation of an ounce of gold vs 1 dollar.) A cryptocurrency (specifically Bitcoin) holds its value because there will only be 21 million coins ever. A better way of thinking about it is the opposite of what happened to the dollar. It comes down to supply and demand.
When the supply is low or stays the same, the demand grows and the value increases; when people hold onto the supply and don’t sell it, the price increases until someone is willing to sell it.
There currently are over 4000 different cryptocurrencies out the. Each crypto blockchain has a limited amount of coins to go around.
One day we will no longer have cash, and everything will be bought with digital money.
So what makes cryptocurrency different and better? Read on, and I will go into the depth of why cryptocurrency is better than fiat.
What is A Blockchain
Here is something else that you have heard of…Blockchain.
What is a blockchain?
In simple terms, A blockchain is a program that holds information. That information can be anything. But how is a blockchain created?
People who work with computers making programs are called coders. They write code (computer language) to tell a program to run a certain way. The way that cryptocurrency work is that the currency is stored in a block. That block has a password to it, but the equation to the password is a complicated question, a mathematical question. To solve the question, you need a computer, and the answer that the computer gets is the password to the block.
When a block gets unlocked, it also unlocks the reward (cryptocurrency). There are a certain amount of coins within the block. As more blocks get unlocked, the harder the calculations get, the harder the computer will have to work to solve the problem. Since only a certain amount of supply (coin) is available to the blockchain, the rewards get cut in half at certain blocks. This controls how many coins go into circulation at a time. Eventually, though the chain will end, there will be no more coins issued onto the market.
The purpose of the block is to hold information. Depending on how the program was written depends on the information the block can store. With most blockchains, they can hold the information on where the coins are, how many are in circulation, and how the coins’ are sent. Etc.
Blockchain programs are secure and can not be hacked into. Therefore you can store personal information that nobody can access unless you give them access. Your information is encrypted using a seed phrase.
A seed phrase is a combination of 12 or 24 random words in a certain order. This is your key to your wallet. (*NEVER SHOW YOUR SEED PHRASE TO SOMEONE ELSE*)
Blockchains are much more complex than how I am explaining them, but this is the easiest way to explain them.
The Future is Now
With this new technology, you can now send money to someone on the other side of the world without the need for a third party. You will no longer need a bank to make the transfer. Think about it. If you need to send money, you need to go to a bank and tell them how much you want to send. Where you want to send it, give your information to them, give information about the person you are sending the money to. Then pay a fee to transfer the money and wait a day or two for the money to clear.
With cryptocurrency, you can send money directly from your wallet to that person’s wallet without needing a third party. There still is a fee for the transaction, and that fee goes to the blockchain. (the fee can be used several different ways depending on how the coders wrote the code; for example, some chains burn/delete the transaction fee others goes towards a mining pool) The time that it takes to send the money is very fast and on average takes less than two hours. In other words, it is Peer to Peer transactions.
Other uses of the blockchain
With blockchains and the information that it holds, the technology that comes with it is endless.
Here are a few examples.
Video games: you can play video games on the blockchain, and the money you earn in a video game will have real-world value to it.
Healthcare: You can keep health care information on the blockchain
NFT: NFT stands for Non-Fungible Token. The easiest way to explain this is a digital asset that you own. Say you are playing a video game, and you win a new car in the game. That new car is an NFT; you can store that car on the blockchain and use it in a different game. Or say you buy a piece of digital art you now have sole use of it; hang it on your wall at home using a digital photo frame—another way of explaining it. In real life, you own pokemon cards, and certain ones hold a higher value than others because of the rarity. Well, now you can have something in the digital world. Yes, you can now buy pokemon cards online and store them in your digital wallet that you can later sell for digital money.
DEFI: DEFI stands for Decentralized Finance. Think of it as a personal bank. You are your own bank. You store your own money and protect it, transfer the money to others, or put it into a savings account (stake) and grow interest on it. (passive income)
Buy houses: If you want to buy a house right now, you need to sign a contract with a realtor, buy a house from someone and use that realtor as a mediator to make sure the transaction goes through. With blockchain, You can make a smart contract on the chain, and you sign it along with the house seller, and you put the money onto the block, and the seller puts the deed to the house on the same block. When the seller withdraws the money from the block then the block will release the deed to you.
I.O.T: Internet of things, one day everything will be connected to the internet from cars to phones, to fridges in your house. All electronics will be able to talk to each other. The information will be stored and transferred through the blockchain.
As you can see, there are endless ways to blockchains. I could give many other examples, but I think you get the message.
Where can I buy CryptoCurrency?
You can acquire cryptocurrency in many different ways.
Buying Cryptocurrency from an exchange: There are exchanges online where you can transfer and trade your fiat money and get cryptocurrency in exchange. (the following exchanges are clickable) Binance, Binance.us (Americans only), Kucoin, Netcoins, Bitbuy, Huobi, there are hundreds of other exchanges on the internet, and they all do the same thing. You deposit your fiat money and exchange it for cryptocurrency.
What Is The Best Cryptocurrency Exchange – Binance Review – Generate Wealth Forever
Airdrops: When new cryptocurrency companies come out on the market, they don’t advertise formally, but they offer free crypto to people like you and me for telling others about the company through social media platforms. This is a great way to acquire free money.
Trade services for digital money: This is self-explanatory. Say you offer a service instead of asking for fiat money, ask for digital currency.
Use crypto web browsers: a couple of web browsers like BAT browser and Cryptotab will pay you in crypto for using their browser. SO while you search for things on the internet, you can be earning money for free.
Staking: when you have crypto, you can stake it in your digital wallet. This is like keeping your money in a savings account. The crypto that is staked will earn interest in the form of the same crypto that you are staking. Therefore you will earn more of the same currency just for holding on to it.
For more free ways to get cryptocurrency, please read the following by clicking the link.
How To Get Free Crypto – Generate Wealth – Generate Wealth Forever
So there are a few ways to buy crypto or earn it. When you do have it, you need to keep it secure in a wallet.
If you want to know what a cryptocurrency wallet is and the best ones to use. I wrote a review article here that you can click and read about it.
The Best Crypto Hardware Wallet – Top 3 Wallet Reviews (generatewealthforever.com)
Cryptocurrency is the new money. It is at the beginning of its time, and the great thing is we are around to profit from it. Think back to when gold was being used for money and the gold certificates were being issued.
If you would have held onto the certificates, then you would be rich today. Cryptocurrency is new and still cheap.
This is the next gold rush!
By getting in now and holding the crypto in savings accounts, then in 5 to 20 years down the road, you will be super rich as the coins’ price will increase due to low supply and high demand.
*”THIS IS NOT FINANCIAL ADVICE. PLEASE DO YOUR OWN RESEARCH BEFORE INVESTING YOUR MONEY”!*
So for you to take the first step in learning what cryptocurrency is, I congratulate you. Learn as much as you can about it as this will be the way we pay for things in the future.
Do you want to learn more about cryptocurrency? Here is a link to more information.
Crypto – Generate Wealth Forever
I hope you become wealthy and live on your own terms for all that you do in life.
Until next time,
To you Health, Wealth and Happiness!!!
4 Replies to “What Is Digital Money – Cryptocurrency For Beginners”
Very interesting article Clifford. I have been very confused about cryptocurrency so your explanation in simple terms is quite helpful. Having grown up with real money in the pocket, cryptocurrency is a bit of a leap for me. Cash probably feels “safer” because I can see. It is amazing that cryptocurrency can appreciate without reference to interest, but I suppose it can depreciate quickly too. If there are so many different cryptocurrencies around, how do you know what to invest in?
Thanks for the comment and question.
With so many cryptocurrencies out there you need to do proper research to find out what would be the best ones to invest in.
One of the many sites that I use to do my research is https://coinmarketcap.com
This place is free to use and you can view all of the different cryptos and discover everything about them.
Hello Clifford Wheatcroft,
It is so interesting to read your article and browse your site. I recently was introduced to Bitcoins and have been learning practically in sections about it…a bit at a time.
It is surprising I came across your site when I did because it is so timely. Your page on this digital currency has made it clearer to me what it is. I have kept hearing how this is the new gold, as you also stated.
I have two questions I wonder if you can shed some light on.
1. Many people are stating that they can multiply these bitcoins by mining them themselves, and they require those interested in investing to invest an amount to return ten times the same in 24 hours. Have you heard of this and its legitimacy?
2. I have been led to understand that I can mine myself through online software. I wonder if what I am being told is that I can use the same apps you mentioned in your blog to get cryptocurrency for free? What do you think?
I appreciate all your feedback on this. Thank you for a fascinating article and for your encouragement to create a passive income. I have been working on this but have not quite gotten there with it yet. I hope to continue visiting your site to continue filling my days with your words of encouragement and to read up your posts on bitcoins.
I am looking forward to your reply, Nyny
Thank you for the kind words. To answer your questions,
1. With crypto being fairly new the are a lot of scams out there. The one that you are mentioning is one of them. You can never guarantee a return on investment within crypto as the market is very volatile. That’s not to say that you can also make huge gains. but to guarantee 10x your money back within 24 hours is a scam. If you send crypto to them you will never see it again. Also, stay away from telegram and discord for the same scams.
2. As for mining crypto, if you invest in a high-end computer such as an antminer then you can mine bitcoin. Other ways of mining crypto are with projects that are or proof of stake.
Proof of stake is where you stake your coins (savings account) and by doing so the blockchain will release rewards to you kinda like proof of work (mining)
You can join a mining pool and in there you pay a set amount of money and the end-user then takes that money and invests in a mining machine and then the coins that are released as rewards get split up to all those in the pool. I have mentioned a few ways to earn crypto for free you can read of them here and yes you can use browsers to acquire crypto.
How To Get Free Crypto – Generate Wealth – Generate Wealth Forever
I hope that I have answered your question. Feel free to ask more.
To your Health Wealth and Happiness!!!