what is crypto? all you need to know
What is cryptocurrency ?
You may have heard many people throwing around words like “crypto,” “bitcoin,” “ethereum,” “blockchain”, or “mining” in conversations. If you’re sitting there wondering what the heck these words mean or why people won’t stop talking about them, no worries – we got you!
Cryptocurrency is the medium of exchange that is digital (online), encrypted (secure), and decentralized (not managed by one person or in one place). Unlike the US Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among its users on the internet (blockchain). To put it simply, crypto holders have more free rein when it comes to their currency.
So why won’t people stop talking about it?
Despite the fact that crypto has been around for quite some time, it’s still relatively new in comparison to your run-of-the-mill dollar. Unlike typical currency, what you start out with isn’t what you will end up with. If you have a $100 bill and leave it in your wallet for a year, it will still be worth $100. With cryptocurrency, however, that value can increase or decrease depending on the market.
Do you have to purchase or invest in cryptocurrency? Of course not! See Money Sense’s article for more information about the basics of digital currency.
Some have called Bitcoin “the new gold.” Just how gold was seen as rare and valuable in the old days, the same goes with Bitcoin in the modern world. Owners of cryptocurrency invest because they see cryptocurrency to be a store of value and an asset to their portfolio.
The creator of Bitcoin, who goes by the pseudonym Satoshi Nakamoto, describes Bitcoin as “a purely peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution.”
Cryptocurrency transactions are chronologically and transparently recorded in the blockchain, where every computer node has a full record of the data that has been stored on the blockchain since its inception. Sounds extremely complex, but it simply means that hackers will have a difficult time trying to obtain anything. No need to clutch onto your wallet, your crypto is incredibly secure!
Big Brands coming “on board”
More and more big brands are buying into cryptocurrency, increasing its visibility and solidifying the future of the digital currency space. As of Feb 2021, Square, the San Francisco-based payments company, bought $170 million of bitcoin. PayPal recently announced that American users can buy bitcoins, as well as hold and sell it in their PayPal wallets.
What is the craziest part? Week over week we see more and more financial institutions hopping on board. It’s essentially like watching the captains of two competing football teams join together to slowly create a super team.
Have more questions?
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