Bitcoin, along with other cryptocurrencies, has skyrocketed in value since its creation. Bitcoin’s cost has greater than doubled in 2021, and Ethereum has actually more than quadrupled in worth this year 😱. Basically, what we’re saying is, that you might want in on cryptocurrency. But, before you put your cold hard cash behind Dogecoin or Potcoin (seriously), you may want to know: Just what is a cryptocurrency, exactly 🤷♀️?
We’ve got you covered 💪. In fact, most buyers could use a basic review of cryptocurrencies and the blockchain that supports them. This article should give you a basic sense of what cryptocurrencies are, how they work, and why people seem completely obsessed with them.
A Cryptocurrency Dictionary for Beginners
To be honest, it’s kind of hard to explain 🤯 what crypto is without getting into a bunch of other definitions. So, we hope this section demystifies a few concepts for you. You will hear these terms in most explanations of cryptocurrency.
Also known as “crypto,” a cryptocurrency is basically an electronic form of money. This digital currency can circulate without interference from a government, bank, or similar authority.
Instead of being tied to such an entity, bitcoin and most other cryptocurrencies are supported by the blockchain. We’ll explain what that is below 🗣.
Bitcoin was the initial cryptocurrency, and it’s still one of the most popular cryptocurrencies today 🤩. Altcoins are any cryptocurrency or virtual currency that is not Bitcoin, such as Ethereum, Dogecoin, and Litcoin.
A blockchain is a kind of database in which a cryptocurrency’s digital sale records are saved. New blocks are continuously developed as expansions of the previous ones, forming a chain ⛓. These blockchains build on themselves within the data source, keeping an ever-increasing quantity of information for crypto exchanges.
Blockchain is a type of DLT or distributed ledger technology. DLTs offer a variety of objectives past cryptocurrency trade 🔁. Unlike common databases, there’s no main authority in a DLT system; instead, the document is saved throughout several areas simultaneously. When a transaction is recorded, it’s permanent, adding to the security of this medium of exchange.
This is a market where you can deal with cryptocurrency. Most people use a cryptocurrency market app like Coinbase or a website like crypto.com for their cryptocurrency transactions. Just make sure 🧐 you sign up for one with reasonable transaction fees.
As a wallet for traditional currency, this is a place to keep your crypto money holdings. Usually, cryptocurrency exchanges supply electronic wallets to hold your digital money 💸. You can also hold your crypto in apps from payment processors like PayPal and Venmo.
What Is Cryptocurrency Security Like?
As a form of payment 💰, crypto transactions and crypto online payments aren’t completely secure in the exact same way the United States dollar or various other recognized money is. Considering that cryptocurrency financial transactions aren’t backed by any kind of governmental authority, it does not have the same defenses as many standard legal tenders ⚖️ throughout the world.
Additionally, volatile cryptocurrency prices, prospective high charges on exchange systems, and cryptocurrency scams pose a threat 🚫 to those curious about cryptocurrency blockchain investments. If your funds are lost or taken, the decentralized finance nature of blockchain and the absence of any type of governmental oversight can make recompense nearly impossible.
Decentralization and Crypto Transactions
However, that doesn’t mean cryptocurrency payments are totally unsafe 🙅♂️. Blockchain innovation support cryptocurrency is inherently protected 🦾. This is in large part thanks to the decentralized network nature of the entire network and the security procedure every deal undertakes.
Because of the blockchain’s design, an online ledger is recorded on a global network 🌐 of computers strung together with an internet connection. These computers frequently use processing power to compare a block of transactions against each other and verify their documents 🗂.
The duplication of these records across the network is part of what protects 🔒 against a fake or wrong deal from being logged. It’s incredibly difficult to steal from wallet addresses or forge crypto assets, for example, because of this network of computing power and its public ledger.
So, like any central bank currency, cryptocurrency is safe enough to reassure many investors. And, with many major companies, financial institutions, and large tech firms accepting Bitcoin and Ethereum, it’s clear cryptocurrency is secure enough to keep it around.
What Is Cryptocurrency? The Way of the Future (Maybe)
Even with all the unrelenting buzz surrounding Bitcoin Cash, Binance Coin, and various electronic coins, cryptocurrencies, as well as the innovative blockchain technology, are still confusing for a lot of people 🤔. On the other hand, the metaverse is booming with new virtual worlds. A digital asset can be worth millions, and plenty an experienced investor has made and lost fortunes on the blockchain ledger just like they have in the stock markets.
Digital currency 💲 is still one of the riskier investment choices out there; every financial advisor or financial planner will be quick to tell you that. However, the cryptocurrency space may also be the way of the future. As long as you recognize the one-of-a-kind volatility of virtual currency before investing, dipping a toe in the crypto market through the exchanges or a VR world like Decentraland can be invigorating.
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