Cryptocurrency has become a hot topic in the finance world. However, if you know nothing about it, words like “Ethereum” or “Blockchain” may seem like foreign, scary terms to understand. However, with some basic knowledge, you’ll be well on your way to better understanding the cryptocurrency market and why it has sparked so much conversation.
What Is Cryptocurrency?
According to Coinbase, at its core, cryptocurrency is decentralized digital money designed to be used over the internet. Bitcoin, which launched in 2009, was the first modern form of cryptocurrency. Over the years, other digital currencies (including Ethereum, Tether, Binance Coin, Solana, and Dogecoin) have sprung up, though Bitcoin remains the most popular and well-known of the bunch. Each cryptocurrency exists on its own exchange, where users can buy and trade it.
Cryptocurrency is supported by a technology known as blockchain, which keeps track of transactions among users. This ensures people can’t make copies of the crypto they own and reduces the need for a “middleman” (like a bank or payment processor) to transfer the digital value of the currency online. This is a major reason cryptocurrency is popular: It is a decentralized market where users can exchange currency without the added influence of another authority like a bank or government. Here are some other things to keep in mind regarding cryptocurrency:
With cryptocurrency, you don’t need to provide tons of personal information to banks or financial agencies. This helps prevent your data from being compromised and protects your identity.
Cryptocurrency is available anywhere in the world (with an internet connection and an electronic device, of course!). This can be a great advantage, considering you don’t have to go to a bank or other financial institution to withdraw money.
Although the network that powers Bitcoin has never been hacked (according to its website, it is the only monetary system that has verifiably never allowed counterfeit currency to circulate), other blockchains like Harmony and Ethereum Classic have been compromised. And because cryptocurrency isn’t issued or backed by the government, there’s no backup to the money invested with cryptocurrency!