Just What is Cryptocurrency?
Historically, a currency has derived its value from the inherent worth of its material token, e.g. coins minted from precious metals – such as gold and silver – was intrinsically as valuable as the metal they were made from. Modern currency is what is known in economics as “Fiat” currency (from the Latin for ‘So be it’), meaning the value of money isn’t anchored in its worth as a physical entity but instead from the authority of a government and national banking institutions (e.g. The Bank of England); subject fluctuations in the market economy.
Cryptocurrency is no different from Fiat currency in the fundamental sense it is a token of value exchanged for goods and services. Furthermore, like Fiat currencies, there’re many different cryptocurrencies, like the British pound vs the US dollar. The most well-known cryptocurrency is Bitcoin, though they’re hundreds of others. However, this is where the similarities between Fiat and Cryptocurrencies end.
Cryptocurrencies are Unique in 3 Key Ways:
1. Cryptocurrency security and transactions are guaranteed by a technology called blockchain. This is where things get technical: the blockchain is essentially a public, digital record or ‘ledger’. Imagine an ever-growing chain of data: every transaction becomes a new link in this chain and a copy of this chain is stored and accessible on every computer used to make a cryptocurrency purchase or transaction. The implications of this is a theoretically completely secure network immune to fraud, as any deviation from the ‘true’ blockchain would be instantly identifiable by all parties.
2. Cryptocurrencies are completely digital; they have no physical counterpart. Cryptocurrency purchases and transactions are totally online. Cryptocurrency is purchased through an online vendor known as a ‘Crypto Exchange’ and will be credited to your digital ‘wallet’ which is identifiable by a unique code (also known as a ‘Master Seed’) and secured by a password (also known as a ‘Private Key’ or ‘Seed Phrase’). These are used to sign/facilitate transactions, providing indisputable mathematical proof that they have come from the owner of the wallet (or at least whoever knows the private key, which is your sole duty to guard and remember).
3. Cryptocurrencies are independent of any government, bank or authority. The nature of the blockchain and the purely digital nature of cryptocurrencies means it falls outside of the jurisdiction of any single centralised authority or agent. With blockchain, there is no dependence on a third party, so no one to close accounts or determine who can send what where. Every transaction can be tracked transparently and anonymously – the blockchain does not divulge the identity of each wallet owner but acts only as a record of transactions.
Benefits of Cryptocurrency Donations
✓ The nature of blockchain means the processes of donation are largely automated and completely transparent. This helps saves the receiving charity avoids many admin costs and man-hours spent on internal processing.
✓ Typically, sending Fiat money demands a fee from the agent brokering the transaction such as a bank or other third-party. This is especially the case with international donations. Foreign exchange fees and credit card processing fees can cost charities up to 7.5% of all donations. Crypto transfers are free and instant – some Fiat transfers can take days.
✓ Safety and security. The nature of cryptocurrency and the blockchain technology upon which it is built means transactions are theoretically invulnerable to any malfeasance or fraud.
✓ Availability and convenience. All you need is an internet-capable device and internet access; no navigating a cumbersome banking app or time-consuming online form.
Cryptocurrency is a truly exciting phenomenon that may wholly revolutionise the way we conduct business and personal finance; taking away the power from banks and governments and transferring it instead to the individual. The first wave of the cryptocurrency boom in the mid-2010s made multi-millionaires of early investors whom recognised crypto’s potential and whose shares increased in value by a factor of thousands.
Like any publicly traded commodity, crypto is subject to the inevitable peaks and troughs of the marketplace. However, there is nothing stopping a second meteoric rise in the value of some or many cryptocurrencies. As more and more people become crypto-aware and seek a secure, convenient and private alternative to volatile Fiat currency, the tech-savvy and crypto-conversant among us today could well become the next generation of crypto millionaires.
ROLDA would like you to join us in participating in the cryptocurrency revolution and help us channel its enormous financial potential into something wonderful: finding a loving home and happy new family for every one of Romania’s homeless and vulnerable dogs. If your require any further information on crypto –including FAQs – please read ROLDA’s ‘How To’ guide to cryptocurrency, available on our website.