Editor’s Write

Cryptocurrencies (or cryptos, I’m sure you have heard about Bitcoin or Ethereum). Yahoo Finance values the global crypto market at USD1.8 trillion, 291 times Jamaica’s 2021 gross domestic product (GDP), a goliath of an industry. Cryptos have made billionaires, are being adopted by governments, and are creating new industries. Today we will explain what cryptocurrencies are to all the Primary Exit Profile (PEP) students and anyone else interested in learning. But why crypto? Financial literacy is a big issue globally, especially for young people. To complicate things, they have to learn about an entirely new form of currency; it is rough! But let us at least give you a little head start by explaining what cryptos are because one day, it may be the only way to spend and make money. We will define cryptocurrency and then go through a crypto example.

A cryptocurrency is a digital asset that can circulate without the need for a government or a bank. Cryptocurrencies use cryptographic techniques; encryptions used to secure information to allow people to buy, sell or trade them securely.

Let’s say we give everyone in your grade 100 crypto PEP coins; you are now a part of the PEP Network. You can use PEP coins to buy lunch. Tomorrow you will use a PEP coin to buy a patty and juice. Your class WhatsApp their lunch order in the morning, and the orders are automatically logged together as a “Block” of lunch orders. The network needs to ensure each class’s orders are secure and accurate, so they convert each block to a string of numbers using encryption. Encryption converts the orders into a puzzle that needs to be solved. For this example, the puzzle will be a PEP mathematics problem, and since PEP is all about learning, you will be rewarded a PEP coin if you are the first to solve the encryption. Anyone that attempts to solve the encryption is called a “Miner”. The faster the miners solve the puzzle, the faster everyone’s lunch order goes in, so the speed is essential. Accuracy is just as important, so we have to make sure the solution is correct; other students in the network check the answer, and once enough students reach a consensus that the answer is correct, the block of lunch orders is added to the “blockchain”. The blockchain is an electronic ledger that keeps track of all the lunch orders. Every student can keep track of all the orders made by looking at the blockchain. You can also buy, sell or trade your coins with other students. If, for instance, the lunchroom ran out of patties that day and you didn’t feel for anything else on the menu, you could trade your coins for a friend’s bun and cheese. That is basically how cryptocurrencies work. Now, let’s look at the good and the bad.

The Benefits

The primary benefits of cryptocurrencies are that no one entity will have central authority over the currency, making it harder for criminals to gain control and exploit coin holders. Secondly, no third-party bank is needed to oversee the transactions, lowering costs. If you check your bank statements or your parents’, you will see different fees the bank charges to track your money, make money transfers, and use their systems, like ABM machines.

Finally, transactions on blockchain networks settle faster. Banks are open on certain days and at specific times, and they need time to verify transactions. Miners are incentivised with rewards to verify transactions as quickly as possible. In the real world, miners are computer programmes that spend all day and night trying to solve the encryptions.

The Drawbacks

The first drawback is a benefit as well; no one entity has authority, meaning no regulation; if something goes wrong, there is no one entity responsible for fixing your issues. Secondly, criminals use cryptocurrencies to hide their illegal operations. The next and potentially most significant issue is environmental; it takes a lot of computing power to solve the encryptions, meaning a lot of energy. Each Bitcoin transaction uses around the same electricity as one household in three months. Finally, it is new; cryptocurrencies are less than 14 years old, there is still uncertainty if they can scale for global use and crypto prices are highly volatile if you plan to invest.

You now have a better understanding of crypto than most of the world. Impress your parents and grandparents with your knowledge.

Next time will explain the innovative and crazy world of NFTs. Stay Innovative Jamaica.

Adrian Dunkley is the President of the Jamaica Technology and Digital Alliance, and founder and CEO of StarApple AI. Send your feedback to marketing@jtda.org.