“Ou ti kav xplik simple-simple kiete sa bitcoin ek koman blockchain tousala marse. Mersi?” David M.
Mersi David, to parmi bokou ki interese ar sa topik-la. Azordi, anou dekripte crypto.
Like many others you’ve probably heard the terms ‘crypto’, ‘bitcoin’, ‘blockchain’ and others being thrown around. You might even know someone who keeps sharing about how much money they’ve made in crypto. And if you’re crypto curious, you’re not alone in wanting to join the party but struggling with the jargon-heavy space.
Cryptocurrencies are new-age digital currencies leveraging cryptography which provides security, in that they’re virtually impossible to counterfeit or double-spend. Most cryptocurrencies run on blockchain technology. This means they are decentralised and not controlled by any one single entity. This is contrary to « dolar ameriken par ekzanp ou nou roupi morisyen » issued and managed by a central bank and legal tender.
In recent times, cryptocurrencies have gained significant traction, especially during the pandemic, where many tech-savvy young investors were flush with time and keen to explore new ways of increasing their net worth. This caused prices to soar and was also compounded by the fact that both retail investors and major funds started thinking of crypto as an investment.
Be eski mo kas safe ar crypto?
Like any financial product, crypto comes with risks. A perfect example of cryptocurrency volatility is Terra. Deemed one of the world’s most valuable and stable digital currencies, Terra recently crashed overnight and lost up to 95 per cent of its value within 48 hours. This triggered widespread loss of confidence in the crypto space. Many believers hailed crypto as a hedge or an insurance against inflation, but in the current bear market, major cryptocurrencies have dropped significantly from their peaks. It is therefore a case of buyer beware.
Kifer dimounn koz bitcoin plis?
Did you know bitcoin was the first cryptocurrency? Launched way back in 2009, initially it traded for mere cents. Today, bitcoin is one of the most expensive crypto. The programming behind crypto prescribes that no more than 21 million bitcoin can be created, therefore as time passes, the coins are becoming exponentially harder to mine. These reasons might be why bitcoin has been called ‘digital gold’.
Kouma aste crypto?
When buying cryptocurrency, you’ll need to set up an account on an online exchange, similarly to share brokerage services. The major international crypto exchanges are Coinbase, Kraken, and BTCMarkets. Once you’ve opened your account, transfer in your funds. After the “know your customer” due diligence process, you can purchase your crypto of choice. To seal the deal, pick what you want, hit the green “buy” button. Et voilà!
Be kot mo gard mo crypto lerla?
Crypto investors and traders keep their funds in digital wallets. Each digital wallet, similar to a safe, has its keys or wallet password. Crypto exchanges generally manage the wallet setup, security and custody for you so you don’t have to worry about setting up and managing your own digital wallet but that isn’t without risk. A common refrain is « not your keys, not your coins ». This means people who may have been victims of scams and lost their money, shouldn’t have stored their coins with a centralised exchange or company which could go bankrupt or might be at risk of getting hacked.
If you’re considering to invest a significant amount in crypto, you might want to set up your own personal wallet. This might be advisable if you’re worried about security but, is also, not without risk. There are horror stories of investors forgetting their private keys or being scammed and losing access to their coins.
Komen blockchain marse?
Blockchain technology, at its simplest, is a ledger. Unlike a bank’s ledger which would be stored on its centralised servers, blockchain technology is distributed. It is a publicly viewable record of all crypto transactions. Any crypto transaction gets lodged on this decentralised ledger, copies of which are held by thousands of computers across the world. These computers cross-reference each transaction with each other to prevent any fraudulent activity. Hence the no double-spend or counterfeiting. Every 10 minutes, these computers take all the transactions received during that time into a package or a “block”. That block is cryptographically linked to the preceding block. Since these blocks are unable to be modified or changed, each new block adds to the “blockchain”.
Eski crypto pou ranplas nou roupi?
Cryptocurrency in its current form is unlikely to replace traditional currency. At least, not in the immediate future. For example, a bitcoin transaction could take about 10 minutes to complete and costs about $US2.50 in transaction fees. That makes it be quite impractical to use bitcoin, pou aste komision ou enn per dalpuri lor semin!
However, this space is fast-evolving and like many countries, Mauritius is looking at becoming a crypto-friendly destination with enabling legislation and regulatory frameworks for virtual assets.
Crypto, is it for me?
To kas, to desizion mon ami. Only you can assess your risk appetite and what you can stomach.
Crypto and blockchain as a technology are financial assets infrastructure that are certainly here to stay. Whatever you choose to do, remember that while it is human nature to rush to broadcast good news on social media, people also tend to nurse losses privately. So for every ‘winner’, there’s many others who have potentially lost life savings.
Full disclosure, I haven’t invested in crypto… yet. For now, I much prefer to be a part-owner of quality profit-making businesses through shares and ETFs. To each their own.
More on investing soon!
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Disclaimer – Information in this column is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute financial advice. Before making financial decisions, consider seeking independent financial advice tailored to your individual needs.