What is a Cryptocurrency?
Cryptocurrencies are a new wave of digital currencies that are and have been disrupting the world as we know it for some time now. Cryptocurrencies have many different functionalities and forms.
So before we jump in to finding out what a cryptocurrency is, I want you to promise something to me… Please, please, please do you own in-depth research before investing or using a any crypto coin. It’s important to know what you are getting into no matter what the investment!
So what is a crypto currency?
Bitcoin, Ethereum, Ripple, Litecoin and many more cryptocurrencies that have become popular around the world today all have their own purpose.
As you may know, the most popular and talked about crypto coin is Bitcoin. Bitcoin is world’s most famous cryptocurrency, but did you know, there are now over 6,000 different cryptocurrencies in the world? (Crypto Coin Prices)
Take a moment and think about that… There is over 6000 Cryptocurrency in circulation digitally compared to 180 FIAT currencies around the world. Even governments are considering launching their own cryptocurrencies called Central Bank Digital Currencies (CBDCs). They may bash crypto a lot in the media but secretly, or maybe not so secretly if you do a Google Search they too know that crypto is the future and whether they like it or not, they know they have to start planning now.
Instead of me giving you deep and meaningless explanation of what is crypto and confuse you with complex technical information, I will start in this post by keeping it simple and list what what a crypto currency is, and what is not.
So what is a crypto currency?
- A cryptocurrency is not a quick rich scheme. A cryptocurrency is not a means to get rich instantly. Any get rich quick scheme needs to be resisted, it’s hard I know but please, try your hardest to resist the temptation of promises to become a millionaire overnight or each 1 BTC for a low low investment only $100.
There are a lot of scams out there I know it’s hard to tell the good from the bad choices! But please, do the research before making a decision or ask a financial expert.
Ok, but why are there so many scams at the moment? It’s because it’s very difficult to prosecute the creators of the online scams if you ever fall prey to one as they could be anywhere and be anyone. It is better to invest in legitimate projects that have shown there worth over time. Here’s a couple of my tips for finding a trusted company to work with.
- The Cryptocurrency market is not like the stock market even if some people out there tell you it is. Yes, it can be traded like a stock but it is also a completely different type of investment.
The stock market is heavily regulated and only operates from 9-5 mostly. However, the cryptocurrency sector is only mildly regulated right now and operates 24/7, 365 days of the year. Cryptocurrencies are not stocks and can vary in functionality and transactional capability while stock transactions technology is the same within a single market. Also, the volatility of stock markets and cryptocurrencies is different as you have probably seen over the last few years!
- Also, Cryptocurrencies are not all decentralised. Major cryptocurrencies like Bitcoin are decentralised but some are not. These also include efforts by various governments trying to install their own currencies. The whole idea of crypto is and should be decentralisation. Any cryptocurrency with a masternode controlling the transactions cannot be qualified as a decentralized cryptocurrency. This means that a small group of people have control over the transactions which is generally not the founding principle of Bitcoin, the world’s first cryptocurrency launched back in 2008.
What Cryptocurrency IS!
- Cryptocurrencies have some form of encryption in its system. It means that even if a digital currency is centralised, it can technically call itself a cryptocurrency if there is some encryption standard in its working. Encryption is now being widely used around the world ever since Bitcoin. Without crypto encryption coins are well, useless, the whole hype around this new crypto technology is that data can’t be read by unauthorised people.
- A totally digital currency. While fiat systems like the US Dollar, Pound Sterling, Euro and others have a system with physical ability to touch as well as electronic cash being circulated around, a cryptocurrency has only a digital existence and thus everything is recorded and kept on a technology called the blockchain.
- A part of the future. Cryptocurrencies are a big part of the present and it will also be our future. Societies are moving towards complete cashless transactions even more so since Covid-19 aka Corona Virus took over the media headlines and stop us from grabbing a quick beer. That’s is why it is more important than ever before to understand what crypto is and how it can help form what some believe to be a better world.