Cryptocurrency: The New Kid on the Block

Have you ever envisioned yourself living in the digital age?  Welcome to a life where you can meet people without going out, work in the comfort of your home, and pay your bills without cash in the palm of your hands. From the Metaverse up to cryptocurrency, we now exist in a new realm, and it is virtual.

The Philippines is now experiencing the rise of cryptocurrency transactions. But first things, first. What is cryptocurrency? Is it wise to have cryptocurrency investments? How will it affect you? Here are just some of the questions most people ask of this new technology.

We understand that there are a lot of explanations on social media about different digital currencies, but let us attempt to introduce you to the new kid on the block: cryptocurrency.

What is cryptocurrency?

Have you ever become frustrated when you try to get physical money? You will incur transaction fees, you also spend time as they verify transactions, and sometimes reject wire transfers for reasons unknown.

While these financial institutions are considered a trusted third party in handling money, they have yet to provide the flexibility that most people need. Hence, people looked for a way to improve their experience in terms of online payments.

Enter cryptocurrency. Investopedia defines it as a form of digital asset secured by cryptography. To use, grow, and manage cryptocurrencies, you need to use blockchain technology.

Through blockchain technology, these cryptocurrencies run on a public ledger called blockchain, in which records are distributed across a large number of computers. This decentralized finance structure allows it to have no central issuing authority and exist outside the control of governments.

It is named as such because it uses encryption to verify transactions. It taps into advanced coding to store, manage, and buy cryptocurrency data between wallets and public ledgers. The aim of encryption is to provide security and safety. The system of crypto currency record transactions into its code itself.

Hence this virtual currency is entered into a decentralized system of the cryptocurrency market where people can publicly see many cryptocurrency exchanges of the currency holders.

Simply put, cryptocurrency is a virtual currency unit that exists digitally. It uses a peer-to-peer distributed ledger system that can enable anyone from anywhere to receive and send payments.

This digital currency is a game-changer in all aspects of business and life as we know it. You don't need to go to the bank to withdraw. Now, all you need is enough cryptocurrency in your digital wallets and now you can have crypto exchanges straight from your mobile device.

How does cryptocurrency work?

Now that you've understood the definition of cryptocurrency, you might ask, how does it work? Filipino Financial Expert, Chinkee Tan, explains how you can get your first cryptocurrency transaction.

How to Start into Cryptocurrency

Get in touch with a broker that can do cryptocurrency exchanges.

Open a cryptocurrency account. You will need to deposit your actual money to your digital wallet, also known as a crypto wallet. An example is Binance. Here is where you can store cryptocurrency funds.

Now, you can start your own cryptocurrency journey. You will use a platform to perform your many cryptocurrency exchanges. You will use a cash app platform similar to Gcash or Paymaya. You can now spend cryptocurrency exchanges, have crypto purchases, and buy cryptocurrency.

How to Grow Your Cryptocurrency

In the same way, Chinkee Tan relates that there are three processes on how you can grow into your first cryptocurrency journey.

A. Cryptocurrency Investing

Buying cryptocurrency works similar to stocks, If you buy a cryptocurrency for a specific amount, you can sell them once its value changes. For example, if you buy crypto for one thousand pesos, once its value increases to two thousand, you can sell them so you can earn from your investment. Investing is considered a long-term move.

B. Cryptocurrency Trading

With this technique, crypto transactions are done daily. Your virtual currencies are easily "cashed out" and traded as a form of cryptocurrency payments. For example, users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.

C. Cryptocurrency Mining

This process called mining is where cryptocurrency grows. There are people who consider themselves ''miners'' who try to solve complicated mathematical problems in order for them to earn coins-- the unit of cryptocurrency.

Using a network of computers and unique hardware such as the application-specific integrated circuits (ASICs), crypto miners validate transactions embedded in the code. Doing this process incentivizes the miners who run the network with the cryptocurrency.

Types of Cryptocurrencies

Another unique thing about cryptocurrencies is they are open source. Hence, if you're an enterprising programmer who decides to check if you can create your own type of crypto currency, you can do so. In fact, a popular example of this is dogecoin.

Dogecoin seemingly started as a joke by its founders and features the meme image of Shiba Inu as its logo. Its underlying technology is derived from Litecoin. As of the time of writing, there are 17,000 types of cryptocurrencies.

Some of the most popular are:

Bitcoin

Considered the first cryptocurrency and is still the most commonly traded. Created in 2009 by Satoshi Nakamoto, it is supposedly a pseudonym for a private individual or group of people who wants to remain anonymous.

Because of its limited supply, investors are attracted to it for its earning potential. However, it also has its own volatility, making it a risky investment.

Bitcoin has a fixed supply of 21 million coins -- compared to billions for other cryptocurrencies. As of this writing, 1 Bitcoin is equal to approximately Php 1.5 million pesos.

Want to buy bitcoin but not particularly comfortable investing in cryptocurrency? You can buy bitcoin from Bitcoin exchange-traded funds or bitcoin ETFs. It can be a win-win situation for both broker and investor as it cuts down complex storage and security issues.

Ethereum

Next to Bitcoin, Ethereum is another popular cryptocurrency. Created in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is similar to bitcoin but with added features, such as conditional transactions and decentralized applications, which aims to improve the quality of each transaction, thus making them "trustless transactions". A perk of Ethereum as compared to Bitcoin is that there is no limit on coins that can be mined.

Litecoin

Created in 2011 by a former Google engineer, Litecoin adopted Bitcoin's technology but added his own modifications. Considered Bitcoin Lite, it possesses several similar features but added other features such as a faster block generation rate and the use of Scrypt as a proof of work scheme. This resulted in faster payments and processes to allow more transactions.

Litecoin is also considered the first altcoin. Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.

What can you buy with cryptocurrency?

The cryptocurrency transactions in the Philippines are somehow limited still, but that's the beauty of it. These virtual currencies will not limit you to a single location or destination where they can be used, you can use them to transact from anywhere and to any firm that accepts cryptocurrencies. Examples of purchases you can make using crypto are:

Technology and e-commerce sites:

Several enterprises recognize the rising popularity of cryptocurrencies in their target market. hence, these companies now offer their tech products with crypto as their payment. Some of them are newegg.com, AT&T, and Microsoft. It was said that the company Overstock, an e-commerce platform, was among the first sites to accept Bitcoin. Now, Shopify, Rakuten, and even Home Depot also accept cryptocurrency.

Luxury goods

Because their target market is those who are most capable of having cryptocurrency, luxury brands now perform cryptocurrency purchases. For example, Bitdials, an online luxury retailer, offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.

Online Payments

As of 2022, two of the well-known online payment portals in the Philippines begin to incorporate cryptocurrencies as a form of payment integrated into their system. DragonPayand Paymaya, are among the country's dominating finance firms in terms of online payments for their e-commerce transactions. Furthermore, Paymaya makes cryptocurrency accessible to the masses, in terms of buying and selling, including Bitcoin, Ethereum, and others.

Future of Cryptocurrency in the Philippines

In the 2016 movie, Dr. Strange, the Ancient One said, "At the root of existence, mind and matter meet. Thoughts shape reality." Can you still remember the time when you need to pay for everything in cash? Now, because of technology, you can purchase anything, with just a few taps on your phone. Whether you have the capability to buy your very first cryptocurrency or not, don't you think you need a tangible investment for your hard-earned money? That's why Lumina Homes is always a safe way to grow your investments.

Who knows, there will come a time when cryptocurrency becomes widely accepted in the country, you can choose from the many Lumina locations all over the Philippines.