Unless you’ve been living under a rock, you’ve probably heard the term “cryptocurrency.” For years, this term has been associated with wealth, controversy, and change. From the rise of Bitcoin to companies adopting crypto, it is something that people can no longer ignore. Learning about crypto can be beneficial with how much technology is changing. Here’s what you need to know:
What is Cryptocurrency?
Cryptocurrency is a combination of two words, cryptography and currency. It is a form of digital currency that operates by utilizing cryptography. Its cryptographic elements make it impossible to counterfeit. They are increasingly becoming popular because of their accessibility and immutability.
Crypto is based on blockchain technology. Most blockchains are decentralized networks where computers from around the world facilitate rules. One of the defining features of most crypto is that there is no central authority in control. It makes them immune from corporate or government manipulation.
Many believe that cryptocurrency can change many industries significantly, from online to financial services. However, there are still many controversies surrounding it. Even then, many people agree that crypto is a force that one can no longer ignore.
The Key Features of Cryptocurrency Assets
Cryptocurrency has several unique features that make it stand out compared to most asset classes. It has more utility and potential compared to others, making it a very volatile market. Here are the reasons why more and more people are going to cryptocurrency:
- Security: Blockchain technology is very secure. Because of its verification system and use of computers located in different parts of the world, it is nearly impossible to commit fraud. Its security is also improving to prevent hackers and other threats.
- Accessibility: Cryptocurrency transactions are easy to use and easy to transfer. Unlike banks or other payment systems, you don’t have to wait days to receive your crypto. It’s as fast as having your money ready at a store.
- Irreversible: There is no way to reverse a cryptocurrency transaction. Once it is on a blockchain, it is final. It removes the middleman, making transactions faster and reducing fees caused by intermediaries.
- Availability: Crypto is available no matter where you are in the world. A government may try to ban it, but its presence online makes it impossible to restrict. You can bring it wherever you go.
- Privacy: There is a measure of anonymous transactions in cryptocurrencies. You don’t need to provide personal information when holding transactions. Your information also stays safe from advertisers, banks, and the like.
- Transparency: Every record on the blockchain is public and viewable by everyone. There is no exception, making no room for manipulations or adjustment.
- Unbound: The value of most crypto holds on its own and isn’t reliant on a single economy. It can operate freely and can even increase in price in poor economic conditions.
A Brief History of Cryptocurrency
Many efforts at cryptography and digital money that occurred in the past failed. It was only when “Satoshi Nakamoto” created the concept of Bitcoin that cryptocurrency started. In 2009, he launched Bitcoin with a vision to create a currency that has no connections to big banks. While he later left the project, Bitcoin would grow to spearhead a digital revolution.
Eventually, more crypto projects began to pop up. While thousands died trying to replicate Bitcoin, some lingered to become distinguished projects. Today, people are developing applications and creating more utility for them.
In mid-2021, Bitcoin last peaked at $60,000, and many other currencies are also increasing their value. Crypto gives people an avenue of investments that are accessible. Over a decade since the creation of Bitcoin, we’ve yet to see what crypto is fully capable of.
The Pros and Cons of Cryptocurrency
Crypto holds distinct advantages over many industries. It performs far better than many payment platforms and banks because of its ability to transfer money fast. There is no need for an overseeing company to take hold of the transaction. The framework of blockchain technology incentivizes people to take part by providing rewards.
Crypto removes the processing fees and other charges. They cannot ban you from participating in crypto because they have no control over what happens on the blockchains.
On the other hand, crypto is still in its early stages. One problem with it is its privacy can open the door for illegal activities. People have used cryptocurrency for tax evasion or money laundering because of anonymity. While there are issues, many enthusiasts believe that these only occupy a small part of the population.
It’s also becoming difficult for criminals to use crypto for activities because of advancements. For example, the Bitcoin network has a system that verifies transactions to help prosecution. However, there are still other cryptos that don’t provide information. There is also the issue of initial coin offerings though most of the illegitimate ones have died away.
What Can You Do With Cryptocurrency?
At the most basic level, there are two things you can do with cryptocurrency. The first is to use them to pay for goods and services. While few businesses have opened their doors to it, the expectation is that it will become more commonplace in the coming years. The other way to use cryptocurrency is as an investment.
Crypto has proven to be lucrative, providing staggering returns that surpass stocks. Many believe that it is a true hedge against inflation with weakening currencies in many parts of the world. It is common for people to buy and hold to sell cryptocurrency later for a profit.
Most services revolve around these two uses. You have a crypto exchange where you can buy and sell crypto. Then there are marketplaces integrated with crypto.
On the more technical end of things, people trade crypto similarly to how one would trade stocks. However, this requires knowledge of reading charts and understanding market conditions.
You can also participate in a process called mining. Mining is having a computer take part in a blockchain network, validating transactions. Because of the competitiveness of mining, it’s hard to get into it without an expensive dedicated computer.
Recent Use Cases
In recent years, crypto has developed many other use cases. You can now loan out your crypto assets to earn extra income or even stake them. Staking is when you let your crypto participate in a mining pool effort. It doesn’t use computing resources and is a green way of earning extra income with what you have.
There are also utility tokens that provide some benefit to the holder. Here are some examples:
- Governance tokens: these tokens allow you to participate and vote in the development of a crypto project.
- Social tokens: allows you to influence the decisions of a sports team, organization, or celebrity. For example, you can choose their jersey design or new logo.
- Security tokens: tokens that mirror an equivalent of a real-world asset. You can have tokens that represent real estate or commodities.
- Non-Fungible Tokens (NFTs): these tokens are digital collectibles. They are unique tokens of a limited amount.
- Stablecoins: crypto that mirrors the value of a real-world currency. They offer stability in an otherwise volatile market.
Should We Become Cryptocurrency Investors?
There is much appeal when it comes to investing in crypto. If you’re considering putting some money in as an investment, here are some advantages that it brings:
- Some crypto gives out rewards to holders.
- You have control over how much you buy. You can get fractional coins that match the amount you invested.
- You can earn more money than in a bank account when you put your crypto in a savings account.
- It’s easy to create a secure account you can link to your card.
- Aside from the potential increase in value, you can also stake your crypto to add more profit.
- Crypto is liquid. You can buy and sell at any time.
- The crypto market is open 24/7.
How Can I Buy Cryptocurrency?
The easiest way to buy is through cryptocurrency exchanges. They have the infrastructure needed to make purchases convenient. You buy a set amount of crypto using your credit or debit card. The crypto is then stored in your account.
From there, you can decide what you want to do with crypto. You can hold it, transfer it to secure offline cryptocurrency wallets, or trade it for other crypto.
Is Cryptocurrency Legal?
Several countries have outrightly banned or restricted cryptocurrency. These include:
- Nigeria
- Turkey
- Egypt
- Vietnam
- Nepal
- Algeria
- Ghana
China has also always been in the conversation of banning crypto, though their stance has changed several times. They recently became adamant about banning crypto mining in their country. They’re also known to explore crypto and are using several projects that give them utility. They are careful when referencing any effort towards crypto as support for it.
For other countries, they allow people to use crypto as they see fit. Most countries see it as an asset, so you’ll have to file taxes on any capital gains you have. There have been talks of regulating crypto for years, but the details are still in contention. Most countries don’t mind having crypto, and some have even adopted it as legal tender.
The Future of Cryptocurrency
With the first ten years of crypto, it saw continuous growth, and it will likely continue to do so with an increase of mass-adoption. While there are still some controversies, no one can deny that blockchain technology has potential. Having an immutable online public blockchain ledger can provide much-needed structure for many.
Others believe that this creates decentralization that will become our future. Crypto can free people from the control of institutions, corporations, and even governments. With no central database, it’s impossible to wipe out blockchain information.
One of the most intriguing developments of recent years is increasing interest in crypto from big players. Many investors who were skeptical from years ago are now supporters. Big names like Facebook, Amazon, and Tesla are all looking to involve themselves in the crypto markets. Traditional financial institutions such as hedge funds recognize it as an asset.
We might see a future where crypto becomes commonplace as it becomes a mass-adopted technology. How prolific and how fast we get there remains the question. The market goes through highs and lows, which also drives the conversation.
What Are The Most Popular Cryptocurrencies?
You can measure popularity in crypto through market capitalization. Market cap measures the circulating supply of crypto and its current price. It is the most important factor when ranking them. Here are some of the many cryptocurrencies that you’ll find people talking about:
- Bitcoin: the first cryptocurrency. Many consider it to be a store of value.
- Ethereum: Eth is one of the most popular blockchain systems and crypto. It has many apps and projects under its infrastructure.
- Cardano: a competitor of the Ethereum network founded by a former head of Ethereum.
- Dogecoin: considered an iconic meme. It has recently become associated with Elon Musk because of his support.
- Uniswap: the largest decentralized cryptocurrency exchange in the crypto space.
- Vechain: the first cryptocurrency blockchain to tackle supply and logistics.
- Theta: a crypto project that aims to make video streaming decentralized.
Development Continues
Crypto has come a long way in the past decade, and development is only getting more advanced. Time will tell the effects of its current trajectory. The fact remains that more people are getting interested with each passing year. If you’re interested in learning more about cryptocurrency, join us at EazyBot.com where you can join a like-minded community and earn passive income with very little effort.
