The Basics You Have To Know About Cryptocurrency

By Boris Dzhingarov

Cryptocurrencies are digital assets whose value isn’t tied to a central bank or government. They utilize a distributed ledger system for supply management, making them highly resistant to counterfeiting.

Cryptocurrency has become a ubiquitous part of everyday life for millions around the globe and offers an alternative to traditional currencies. Despite recent restrictions by Nigeria’s government, its usage continues to expand within the country.

What is a cryptocurrency?

Cryptocurrency offers an alternative method of storing and transferring money. It solves many of the issues inherent in traditional banking – such as limited resources, hacking, and a single point of failure – by replacing them with decentralized digital currencies that aren’t backed by governments or central banks.

Nigerian regulators have attempted to restrict cryptocurrency access in the country, yet cryptocurrency use continues to expand rapidly. According to Chainalysis’ 2021 Global Crypto Adoption Index, Nigeria ranked sixth out of 17 countries for 2021.

Nigerian users received $2.4bn worth of crypto in May, ranking second only to the US. A survey by KuCoin of 360 Nigerian investors also revealed that remittances made through crypto are increasing rapidly.

What is a digital asset?

Digital assets refer to any content that can be stored digitally and provides value to its owner or user. This could include photos, videos, graphics, audio files, presentations, documents and more – all digital in nature!

Digital assets are essential to businesses, as they aid in marketing, branding and sales initiatives. Unfortunately, managing them can be challenging without an effective Digital Asset Management (DAM) system in place.

It’s no shock that companies with vast libraries of digital content often face difficulty organizing and accessing it all. As a result, marketing teams struggle to create high-quality campaigns or product launches.

What is a nonfungible token?

Nonfungible tokens are digital assets that cannot be replaced or traded for another. They use blockchain technology, the same foundation behind cryptocurrencies like Bitcoin (CRYPTO:BTC) and Ethereum.

These digital tokens are programmable, digital items that publicly demonstrate ownership of digital assets like art or music or physical assets that have been tokenized, such as houses and cars. They serve to certify authenticity and ownership of these digital assets and can be created using software called smart contracts.

NFTs are essential components of the digital world, helping to guarantee transaction security and facilitate trade. They are identified by unique identification codes and metadata that set them apart from other assets on the blockchain.

What is a hot wallet?

Hot wallets are online cryptocurrency wallets that enable users to store, send or receive cryptocurrency. While these platforms tend to be less secure than cold wallets (hardware or paper), they may also provide more convenience.

Security-wise, the best way to safeguard your private keys is by using either a hardware wallet or software like Electrum. These wallets can only be accessed by you and no one else.

Cryptocurrency adoption in Nigeria is on the rise, as people search for ways to buy and sell digital tokens within the country. Unfortunately, a government ban on cryptocurrencies has created some uncertainty in the market.

What is a cold wallet?

Cold wallets are physical devices that store your private keys offline, making them more secure than hot wallets as no one but you has access to your coins unless they’re physically present.

Hot wallets, on the other hand, rely on keys created online which could potentially be compromised or stolen. Furthermore, it requires an internet connection for use which makes them less secure than cold storage options.

Cryptocurrency is available through several exchanges and wallet providers in Nigeria, such as Coinbase with 43 million customers worldwide who offer secure yet user-friendly storage for your digital assets.