What is cryptocurrency? – The current of the American river
All this news about Bitcoin and Dogecoin, but what is it really?
Ask yourself something: if you lived 100 years ago and someone told you that there would be a type of currency that you can never see but is worth thousands of dollars, would you believe them? ?
This is exactly the case with cryptocurrency. Everyone is talking about Bitcoin and how 23 year olds have made millions of dollars from it. But very few people know what ‘crypto’ really is or how to go about getting bitcoin or dogecoin.
What is cryptocurrency? Investopedia defines it as “a digital or virtual currency secured by cryptography, which makes counterfeiting or double-spending almost impossible. Many cryptocurrencies are decentralized networks based on blockchain technology. This means that it is virtual currency that is secured on a third party network that is not tied to any government entity or reserve.
The first cryptocurrency that was created and which remains the most popular and valuable is Bitcoin. Bitcoin was created by a group or person under the pseudonym “Satoshi Nakamoto” in 2009. As of March 2021, 18.6 million bitcoins are currently in circulation with a market value of over $ 927 billion.
Since then, many other types of cryptocurrency have been created; they are known as “altcoins” and have all experienced various forms of success. Cryptos like Litecoin, Peercoin, Dogecoin, and Ethereum are all different types of coins, and in fact, there are over 6,700 different types of cryptocurrency. All of these combined are worth over $ 1.5 trillion combined, over 60% of which is in the form of bitcoin.
Now that we have discussed what cryptocurrency is, the next question is, how is crypto useful or what makes it different from the US dollar or the euro? A major advantage is that it facilitates the transfer of money by eliminating the third party such as a bank or a service. Crypto has the ability to create a secure transfer using public or private keys that secure this transfer between the two parties.
Another big reason is that many speculators see it as the future way of using money and a transition to owning virtually all assets. Given this idea, many speculators and investors quickly buy more with the belief that they will increase in value in the years to come.
The downside is that this is all purely speculative and is market based. If no one thinks it is valuable, and it is not backed by a standardized system like the US Treasury’s gold standard, it is worthless. The other aspect is that it has the potential to explode to be worth millions and that by owning one coin it could set you up for life.
If anyone is interested in purchasing cryptocurrency, there are a number of options. First, a growing number of ecommerce platforms such as eToro and Robinhood are offering cryptocurrency as a buyable and tradable share / value to add to your wallet. The other way, and a more common idea historically, is to have an online application called a “wallet” that allows you to hold your currency which you can buy on an online exchange. For more information on buying crypto such as Bitcoin, click here.
Cryptocurrency is a new and innovative way for people to invest their money. These types of currencies require to be understood so that people can make better decisions when trading these assets or just having this basic understanding for the future. As people start to find new ways to generate income, it makes sense to understand everything, even those that may have been created from scratch.