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Topic 6
Grab a glass of wine because you’re almost done.
In the first topic, we explored a crypto story that described a transfer of funds between friends planning a trip to Bali for their mutual friend. Here is the same story but with crypto.
Crypto/Blockchain Transaction
• Sarah wants to do something nice for your mutual friend’s birthday, so you agreed to pitch in on flights for a really nice trip for her. Sarah calls you and says, ‘Can you transfer crypto to me? Bitcoin, please. :)’
• You send your BTC coins to Sarah. The coins leave your crypto wallet and go to hers. What happens when you do this? The transaction goes onto the blockchain or a public ledger (an online space that records all transactions—think green matrix screen) where many computers (called miners) keep track of every transaction. If you don’t have the right amount of crypto in your wallet, the computers verifying this will not allow the transaction to go ahead.
• In this particular example, you have enough Bitcoin in your wallet to transfer to Sarah, and the miners have agreed that you do, so now your transaction is successfully sent to Sarah’s Wallet.
• The group has verified the legitimacy of the transaction.
• Let’s hope the airline accepts Bitcoin 🤪
Based on this story, you can see that cryptocurrency offers an opportunity to transfer funds without the possibility of human error. You can rely on technology and code rather than intermediaries such as banks. Blockchain is the technology that makes this possible. Blockchain brought the internet into the era of Web 3.0. The Global Financial Crisis of 2008 is a great example of human error that preceded the timely reveal of the first-ever blockchain and cryptocurrency, Bitcoin.
In the story, Sarah requested Bitcoin, among other coins such as Ethereum and Doge. This could be because Bitcoin’s fundamental purpose is to be a medium of exchange, it is more widely accepted than any other cryptocurrency, or that’s just the coin she wanted to use. But how come she used a coin instead of a token? Coins are primarily used as money, while tokens such as NFTs offer utility. They can be transferred like coins, but the exchange rate can widely differ.
Take as much time as you need to let all that sink in. If you are still confused, there are many topics we will further elaborate on in upcoming modules. In the meantime, do some self-care, have a nap, then come back ready to dive deeper into the crypto world for module 2: “It’s not just about crypto” ..?
Bec Jones