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Cryptocurrency has been around for several years now. However, it emerged in such a gradual and ill-defined manner that plenty of people more or less missed the boat on understanding how it works and what its purpose is. So, even a few years into cryptocurrency’s mainstream lifespan, we thought we might put together a general introduction for anyone who may still be curious.
What Is It?
You can find some extremely complicated definitions for cryptocurrency, to the point that they can leave you more confused than when you started. To avoid this, it can be helpful to work from the ground up. On the most fundamental, basic level, cryptocurrency is an alternative form of payment to cash, credit cards, and checks. So, from there, what makes it different? Primarily it’s the fact that cryptocurrency is entirely digital; it does not exist in physical form, nor is it backed by any physical resources such as banks; It is, for lack of a better word, code with monetary value.
As you may glean from the name, cryptocurrency is also meant to be encrypted. It is in theory beyond difficult to hack or corrupt, which speaks to the idea that it is a more secure store of wealth than any traditional alternatives. Finally, cryptocurrency also exists thanks to blockchain technology, which is often described as a universal public ledger. Every transaction that’s made is recorded on the blockchain, which provides full transparency and accountability for all financial exchanges – but does not reveal specific identity details of involved participants.
What Are The Top Cryptocurrencies?
“Top” Cryptocurrencies are difficult to define in any absolute manner. Some cryptocurrencies have higher current values, while others may have higher market caps; some have more utility, while others are appreciated for their potential. Without getting too granular about it though, there are six or seven names you should really know if you’re interested in getting involved with cryptocurrency. Bitcoin, bitcoin cash, litecoin, ethereum, ripple, dash, and Zcash, as of now, are the most significant cryptocurrencies, for various reasons; Bitcoin, though, remains the leader in that it started the whole phenomenon and still has the greatest value by a wide margin.
Where Can You Use Them?
This is a complicated question with ever-evolving answers. The broad truth is that cryptocurrency just isn’t as useful, as everyday money, as some believed it would become. However, that doesn’t mean there aren’t opportunities to make practical use of it. There are various online retailers that accept bitcoin and a few other cryptos, from small online shops for specific types of goods to a few larger stores like Overstock. There are also opportunities out there to buy food via cryptocurrency (Subway famously accepts bitcoin), or to purchase store-specific gift cards the same way.
There are also other areas in which we expect to see cryptocurrencies become useful. For instance, the vast, international online betting and gaming industry has essentially cracked the door open for cryptos. A guide to New Zealand’s betting sites, which are among the best and most widely used in many cases, specifically notes that these platforms thrive by accepting funds from “many different sources.” And we’ve begun to see some smaller casino sites including cryptos among those sources. Somewhat similarly, we also know that travel booking platforms can thrive by accepting a variety of payments and that some of these, too, now accept bitcoin. Ultimately, keeping an eye on some of these larger international industries, like gambling and travel, is wise for those concerned with cryptos’ practical usefulness.
What About Investment?
Despite some of the examples we just gave about where cryptocurrency can be spent, or where it could still thrive in the near future, the fact remains that its function as a legitimate currency has been a disappointment. Over the course of the last three years or so, though, rather than getting discouraged by this, people have taken to looking at cryptocurrencies in a whole new way. Most now consider them as investable assets.
Cryptocurrencies can be stored in various ways, through both digital and paper wallets. In either case, you are essentially provided a public address (a line of code representing your stash of cryptocurrency) and a private key (your own, secure way to access and make use of that stash). So, as long as you keep these things secure, you can hang on to a store of cryptocurrency as long as you like. This makes it surprisingly easy to invest and hold over time, and this has led many to approach cryptocurrencies as commodities – not money.
This is the big question, and if we could answer it with total accuracy, we’d all get rich investing in cryptos! The truth is it’s been difficult to date to predict fluctuations in cryptocurrency value or utility, and it will continue to be difficult in the coming years. One thing we do know though, on a related level, is that the blockchain – the aforementioned underlying tech supporting cryptocurrency – is evolving to serve new purposes. Much has been made about the innumerable potential applications, with some even suggesting the blockchain can help to build a new version of the internet. It’s this, ultimately, that may be more interesting to keep tabs on than the development of specific cryptocurrencies.
This guide certainly doesn’t cover everything, but hopefully, it’s helped anyone who might be curious to gain a better basic understanding of cryptocurrency. From here, you can start to learn the ins and outs of the complex but interesting fintech phenomenon.
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