Digital money & Cryptocurrency Flashcards
What is money?
A medium of exchange
What makes money a unit of account?
-Recognisable
-Fungible
-Divisible
-Transportable
-Tranferable
Hard to counterfeit
Define fungible
The property of a good or commodity whose individual units are essentially interchangeable and each part is indistinguishable from another part.
Money is a store of value
-Stable supply
-Durable
-Securable
Stable value
Define cryptocurrency
A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transaction and to contol the creation of additional units of currency.
How is crypticurrency a bearer instrument?
-Holder has ownership
-No other records kept as to the identity of the owner
-Easy to keep anonymous
-Hard or almost impossible to replace if lost or stolen
Describe cryptocurrencies
-Virtual
-Highly portable
-Highly durable
-Global
-Highly secure
-Protected by blockchain
-Decentrlaised
Why use cryptocurrency?
-Fast, safe and cheap
-Ease of use and highly portable
-Untraceable
-Trasparent and netural
-Decentralised nature
-Active involvement of users
-Low inflation and low risk of collapse
What are the risks of using cryptocurrency?
-Hackers
-Few legal protections
-Cost
-Scams
-Lack of transparency
Risks of Cryptocurrency: Hackers
Some cryptocurrencues have been the target of highly sophisticated hackers, who have been able to breach advanced security systems.
Risks of Cryptocurrency: Few legal protections
If you trust someone else to hold your cryptocurrencies and something goes wrong, that company may not offer you the kind of help you would normally expect from a bank or credit card provider.
Risks of Cryptocurrency: Cost
Cryptocurrencies can cost consumers much more to use than normal credit cards or even regular cash, often due to high price volatility.
Risks of Cryptocurrency: Scams
There are a lot of fraudsters taking advantage of the hype around virtual currencies to cheat people with fake opportunities
Risks of Cryptocurrency: Lack of Transparency
The anonymous nature of cryptocurrencies makes transparency and accountability very difficult for consumers seeking to ensure the safety of their investments.
What is the technology behind bitcoin?
-Bitcoin is a protocol, the unit of account us “bitcoins”
-Based on block chaining
-Anonymity of transactions
The history behind bitcoin?
-First registered as a website on 18th August 2008
-The first bitcoin transaction was for 10,000 bitcoins to purchase two pizzas
-Value of one bitcoin in March 2010 was only $0.003
-Value of one bitcoin today is 47,532
What do bitcoins look like?
-All bitcoins have two unique numbers in a public key and a private key.
- Public key (“Adress”) 34 characters starting with 1 or 3
-Private key: 51 characters starting with a 5 (Required to transfer the value from this address)
-Bitcoins are kpet in bitcoim wallets on a computer
What is blockchaining?
Blockchain is like a digital notebook that keeps a secure and unchangeable record of transactions or data.
What is the legal status of cryptocurrencies?
-Exchanting bitcoins for anything is legal
-Anonymity of bitcoin can help people opeating outside the law
-Authorities are highly likely to attempt to regulate/ban cryptocurrency
What are some pros of cryptos?
-Decentralised system: avoids the risk of a single point of failure (banks) can generate a crisis
-Easy and fast movement of funds without a need of a third party
-Can be used to transfer real money across borders without big exchange costs
-Blockchain makes it secure anf transparent
Cons of crypto?
-Not completely anonymous, they leave digital traces behind
-Crypto wallets can be hacked
-High price volatility
-They have become popular tool for criminals for money-laundering activities.
-Few legal protections
Define “Non-fungible”
Means something that is unique and can’t be replaced with somthing else. For example, a one-of-a-kind trading card, is non-fungible.
