Cryptocurrency: the basics
In a nutshell, cryptocurrency is (mostly) decentralised digital currency that lives on the internet.
The first and most well known currency, Bitcoin, was invented in 2008 and has inspired the creation of thousands of alternatives including Ethereum and USDC.
Although a popular use of these currencies has been to use them as an alternative to “centralised” or government-issued currencies, they now have many uses among the communities dedicated to each project.
What makes cryptocurrency different from regular money?
- Cryptocurrency does not rely on a third party (like a bank) to enable transfers. This means people can transfer cryptocurrency globally, more quickly and with much lower fees than a traditional bank.
- Newer currencies than Bitcoin allow different features than simple transference of coins, such as community membership, trustless trading and the use of advanced financial instruments such as DeFi.
- Cryptocurrency (generally) cannot be controlled by central authorities or governments. This is due to its open-source and community-led nature. The network for cryptocurrencies is generally created and upheld by its community.
- Cryptos are secured by technology called Blockchain.
- All of a cryptocurrencies transactions are distributed across its network - rather than being held in a central place, like a bank ledger.
The Core of Crypto.
Cryptocurrency is Private
Most points of sale require you to give the person you are buying a lot of information about yourself - your name, location and contact information at the very least. This puts this information at risk for fraud, sale and misuse. Cryptocurrency transactions generally do not contain any more personal information than the person sending it wants to share.
Cryptocurrency is Secure
There is massive computing power behind the security of Cryptocurrencies - often above the billions of dollars worth in hardware. This makes it very resilient to attack by malicious actors.
Cryptocurrency is Transparent
Every crypto transaction is published in an open ledger called a blockchain - this prevents manipulation and and secret changes of money supply.
Cryptocurrency is Portable
Cryptocurrency can be accessed anywhere in the world with an internet connection.
An Alternative to the Legacy System
While there are pros and cons to each system, crypto offers a much better alternative than government issued currency for a lot of people in the world.
While this may seem strange to anyone from a developed nation (who often take their relatively stable currencies and relatively functional banks for granted), there are many countries that have seen the opposite - events such as hyperinflation, civil war and economic collapse see currencies and assets rendered useless, banks locking customers out from withdrawals and other loss of wealth and sovereignty.
Cryptocurrency is the first time these people have access to open source financial services - and all the need is a phone and an internet connection.
While Crypto’s use-cases increase by the day, here are some popular ones:
- - Purchase goods and services such as Digital Art (NFTs) on places like Opensea.
- - Support charitable causes, such as those on Giveth.
- - Own virtual land in Metaverse spaces such as Voxels.
- - Experiment with DeFi - loan, or trade currencies trustlessly with Decentralised Finance technology.
Disclaimer: None of what is written in this article is financial advise.