Does your cryptocurrency understanding hold?

Many of my colleagues suffer from conflicting messages and information on the Internet, especially when searching for the latest topics related to financial technology, also known as “Fintech”, the subject of “digital currencies” or “cryptocurrencies” is a great testament. I can understand this dilemma without any difficulty due to the nature of these modern use-cases. Most of them rely on the bleeding edge kind of technologies, such as the concepts of encryption, distributed computing, decentralization, and the never-ending complex world of cybersecurity.

The tech background is inevitable

Having a technical background is definitely a vital pillar that interested people need to have in order to analyze these technologies in the realms of risks and opportunities. I’ve seen opinions of economists and politicians in this field, and, unfortunately, to some degree, they’re not even remotely attached to reality, and the reason for that is their belief that the “technical” part of their understanding of this technology is not really a necessity. In my humble opinion, the technical part is not only important, it is almost inevitable.

The blueprint of all

Digital currencies are applications and systems that depend – most of the time but not always – on decentralization to solve certain problems in the world, the most famous of which is Bitcoin. Many individuals and commercial and government institutions differ radically in their views against the concept of the global currency “Bitcoin”. It is just pure ignorance that we underestimate the importance of this technology from a technical, economic, and governance point of view. Whether you are an individual, a company, or a government, it is imperative that you study Bitcoin as it represents the first blueprint on which many modern decentralized applications are based.

Baking logic into chains

Ethereum is one of the most significant projects in the blockchain and decentralization space, it borrows many of the decentralized principles of Bitcoin, and it turned out that Ethereum is a practical solution to many of the problems that have long been a concern for societies and businesses. An example of this is the concept of “ownership”, take NFTs for instance, which has, unfortunately, by now, a bad rep since people are abusing the tech to buy crazy photos, memes, and meaningless art all over the Internet. However, when we look at it from a technical angle, NFTs are a great way to prove ownership on the Internet finally. Digital currencies do not mean the loss of governance, in fact, digital currencies allow the inclusion of programmable logic in the form of software, and smart contracts are the evidence, and honestly, living proof of how powerful this idea is, ownership done right on the Internet is really a revolutionary idea.

The game of calculated risk

Investment is a natural response to new and confusing things, whether it is a response to equity ownership in new companies with important creative ideas or investing in human resources that bring reality closer. What is the difference then if we’re talking about investing in modern applications in the form of digital currencies when governance is done correctly? Remember, dear reader, the one common thing in every sane investment is that you have to do your homework regarding the feasibility of these “opportunities” before investing in them. When you invest smartly, you are not gambling; you’re making a calculated risk.

Leave a Reply