Cryptocurrency

An Introduction to Cryptocurrency

Cryptocurrency is a digital currency which is built on top of a blockchain. A description of what a blockchain is can be found here. As such, it is maintained by a decentralised system through cryptography where transactions exist on a public ledger and are verified by mining of blocks.

What is Fiat?

Fiat is the most common form of currency. The Rupee, Pound Sterling and the 500 variants of the Dollar are examples of fiat. Fiat is pretty much the opposite of crypto. That is, it is centralised and regulated.
What does this mean? Being centralised means that it is "managed" by a central organisation, such as a government. Being regulated implies this central organisation has full control over the currency.

The problems with Fiat

Fiat is limited by geographical boundaries. I cannot use Mauritian Rs in the UK if I wanted to. I would have to convert my MRs into GBP. Fiat is not global since every country has their own legal tender.
Furthermore, Fiat's centralisation and degree of regulation may be considered nefarious. A government can know where you are spending your money and can impose restrictions on bank accounts as it sees fit.
Additionally, with Fiat, unless you keep all you money in cash, it is not even your money! The bank essentially owns your money and makes money on that. Plus, banks are notorious for all kinds of hidden fees and other impracticalities.

Benefits of Cryptocurrency

Cryptocurrency is, by nature, decentralised. This means that it is generally impossible to regulate or monitor. Special crypto like Monero are specialised in obfuscating transactions but even standard ones like Bitcoin and Ethereum are somewhat anonymous. There is no body or organisation governing the crypto space and so there is no means to shut down my wallet. Furthermore, with crypto, you are the only one who has control over your money; there is no second party which has access to them.

Crypto, due to being so decentralised, is an ideal candidate for a global currency. It knows no geographical borders and thus can be used essentially anywhere in the world. It is an ideal candidate for transactions between countries with no fees and with the funds being transferred instantaneously. No need to wait hours or days for banks to process transfers, no need for conversion of currency and no hidden fees.

Getting Started With Cryptocurrency

Fortunately, cryptocurrency is extremely simple to get into. Of course, I will also explain the different parts of the crypto universe as we encounter them.

Getting a Wallet

Imagine a crypto wallet just like a real world wallet. You keep your money in your wallet. In the same way, a crypto wallet acts as a place to store your cryptocurrency. There are several types of wallets and the ideal type depends on use case. This includes hard wallets, soft(ware) wallets and paper wallets. In this case, I will be showing how to setup a software wallet, since this is the middleground and is the most suitable for most people.

The most popular wallet, I believe, is Metamask. You can read about it and download it here! It is a highly versatile wallet which lets you buy, sell, store, exchange, and transfer cryptocurrencies, as well as holding NFTs and facilitating connection to apps. It is available as mobile app and as extension to most major browsers. Note that Brave browser comes with its own wallet and, from experience, having the two installed causes issues. Metamask supports many cryptocurrencies and blockchains but not Bitcoin (on the BTC network) or DogeCoin (on DOGE network). It is Ethereum focused since Ether is a crypto with huge adoption and use online.

When the Metamask installation is complete, you will be prompted with a new tab in your browser. From there, it is very straightforward to follow the steps. All you need to do is type out your password and note down your 12 word key. Now, this is extremely important:

You are dealing with money, no matter how abstract it may be. DO NOT reuse an old password. Here is a link to a password generator. At least 16 characters please.
Your 12 word key is extremely important. It is the "last line of defense" for your security. If ever your device gets lost or destroyed and you lose access to your wallet, you will have to "restore" it on another device. You need this 12 word key for that. DO NOT discard it as unimportant.
Follow the 3,2,1 rule to keep your password and restore key safe. You need at least 3 copies, stored on 2 different media, with one of them being offsite. I would personally not store them on any device connected to the internet. Instead, all my passwords and keys are written on paper.

With that out of the way, you now have your crypto wallet!

Finding Your Address

If you open the Metamask extension, you will see something like "Account 1" with a string of characters under. For Ethereum, it is like 0x2F4...0564. You can copy the whole of it. Mine is 0x2F47159092107B5F862EbDE8f32023fd83130564. This is my address. What is it and what is it used for?
etherscan.io is what we call a blockchain explorer. You can see all the transactions in the blockchain on there. You can search for transactions from and to a particular address. Anonymity is nonetheless preserved as you cannot associate a person to the transaction. In fact, the transaction is represented as a certain address transacting with another. Your address is your public key. It is what people will see when you send crypto to them and it is what they send crypto to when they want to send money to you.

Buying Cryptocurrency

Buying cryptocurrency is fairly simple if you have Paypal or a card. Metamask lists a number of 3rd party services where you can buy crypto. When you buy crypto, it will be deposited into your wallet. Make sure your wallet has the crypto added. It needs to be on the Ethereum Blockchain unless you have imported another chain.

Importing a New Crypto

Let's say I want to add this crypto called Matic to Metamask. For this, you need to scroll down and click on "import tokens". You can search through Metamask's own list of crypto. Here, Matic already is in the database. However, if the crypto you want to add is not visible, you have two options. The more annoying one is importing the coin/token manually and there are guides for that. Otherwise, head over to Coingecko and find the coin. Here is Matic's page: https://www.coingecko.com/en/coins/polygon . Look at the Info tab on the right. Then you can click on the Metamask logo to add it automatically to Metamask.

This is intended to be a rather complete introduction to using cryptocurrency! Of course, you can spend your crypto on many websites online, it doesn't take much researching. Oh, and be careful because the price of crypto can fluctuate a lot, causing you to lose money. To avoid this, try using stablecoins like Dai and USDT. Evidently, none of this is financial advice :D