For the past 2 years since I started my journey in exploring this wonderful technology, I have also been talking about this to my friends and colleagues as well. When I try to do that, it becomes a big challenge. Sometimes people are interested to know more about this and when I try to explain, they say that it is not their cup of tea and walk away. I’m actually fine with such people because they at least decide that it is not their cup of tea yet. But there are some people who try to understand this and they continuously put some efforts to understand this and fail. One reason is that they are lazy to explore this by themselves and another reason is that they are not very technical and money is the only motive for them.
So, when I usually have this conversation with my friends I usually get some standard questions that I somehow try to answer. I would like to list out some of the questions that I get and the answers that I usually give them.
Note: I stopped giving detailed answers to people after a few experiences. I make sure my answers are only on a high level and understandable for anyone. For detailed answers I let them do their own studies.
What is Blockchain?
Blockchain is the technology that is slowly emerging and getting ready to create a new future. I usually compare Blockchain with the databases that are currently available. I say them that Blockchain is a decentralized database where if the information is stored once, it is saved permanently. There are different types of blockchains and in every blockchain, if a block is produced, a reward is also produced and that reward is distributed either to the block producer or the contributor based on the rules set on the blockchain.
Bitcoin was the first cryptocurrency on Blockchain and when we usually talk about blockchain, people first think about Bitcoin and ask questions about Bitcoin. Just to clarify, there are several blockchains like Bitcoin and there are several use cases for each blockchain.
What is the difference between Blockchain and Cryptocurrencies?
Cryptocurrencies are the rewards that are produced from the Blockchain when the blocks are created. Cryptocurrencies are the digital assets that are unique in its formation and are tradable in the exchanges. There are many exchanges available that accept different types of cryptocurrencies. Blockchain is the technology behind the creation of Cryptocurrencies.
How do we determine value for a cryptocurrency?
There is a concept of ICO – Initial Coin Offering in the crypto world. This is something similar to IPO in the share market world. Apart from that when a coin or token or cryptocurrency is listed on an exchange, it gets a value based on demand and supply in the market. If the project that is backing the cryptocurrency is really promising, people invest a lot on that cryptocurrency. When investments are huge, the price automatically increases.
For example, there is a blockchain called Steem and there are some DApps that are built on top of this blockchain. Some use cases are as follows:
- Steemmonsters is a gaming platform where you can collect cards and earn digital assets.
- Steem itself is a blogging platform where you get votes on your posts. The votes carry rewards and that rewards are in the form of Steem Cryptocurrency.
Is it legal in India?
Most of the people think that this is something that is illegal everywhere and people try to trick others to gain money and some people even relate this with gambling. According to the statements given by the Government of India, Cryptocurrencies are not considered as legal tenders in India. As it is not a legal tender, we are not allowed to start a business with cryptocurrencies and officially use cryptocurrencies for transactions.
In other words, I guess it should be fine to continue using the p2p option in India because we are just collecting them and not using them anywhere for anything. Well, to be honest, the government is also confused a bit to add regulations to the way cryptocurrencies can be used by people. I hope the regulations will come soon.
Can we make real money?
Yes, it is definitely possible to make real money with the help of cryptocurrencies. There are ways in which cryptocurrencies can be gathered and p2p exchanges can be used to convert them to real money. There are many exchanges operating in India that can help with a p2p exchange.
How to get started?
Blockchain can be used by different people based on their area of interest. If you are a developer and would like to explore the technology, you can do so and create your own blockchain for your needs. There are also ways in which DApps can be built on an already available blockchain. For someone to get started with Blockchain, it is really important to understand the basics and it requires some reading.
If you are just a trader and would like to use cryptocurrencies as a trading tool. The market is open and you can do your experimentations there. You don’t need any big talent to get started. Just grab some cryptocurrencies and follow the normal trading rules that we usually follow in the share market. Instead of doing commodity trading, we are just trading with digital assets.
So, above are some of the questions I frequently receive from people and I try to answer them as much as possible. But even after that, I really find it frustrating to convince them about how Blockchain and Cryptocurrencies will be the future. I sometimes feel that it will really take lots of time for normal people to understand this ecosystem.