Crypto, crypto, crypto! What is all the craze about? If you are anything like me, you’ve heard the word cryptocurrency on a near-daily basis at this point, but you still have absolutely no idea what folks are talking about. Currently, 20% of Americans adults and 36% of millennials own cryptocurrency. The Central African Republic and El Salvador have made bitcoin their official national currency. The entire crypto market is currently valued at around $1.75 trillion dollars and continues to grow each year. With all the buzz, I decided to dig into cryptocurrency myself to find out what all the hype is about and to better understand this term.
What is cryptocurrency?
Well, according to the Oxford dictionary, cryptocurrency is “a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.” Still not making sense to you? Me neither. Let’s break that down a bit.
Basically, cryptocurrency is a form of money that only exists in a digital or virtual state, i.e. on your phone. Think of our regular paper money system and then imagine keeping track of money in a purely digital form…no more bills or coins. Cryptocurrency is not issued by a single agency or system such as the U.S. Treasury, so it is considered decentralized. Cryptocurrency relies on cryptography or a secured communications system to complete transactions.
How long has cryptocurrency been around?
The idea behind Bitcoin was formed in 2008 by Satoshi Nakamoto. Many people believe the inventor’s name is actually a pseudonym, and that Bitcoin was developed by a team of people. Cryptocurrency was first introduced to the public in 2009 by the leader in cryptocurrency, Bitcoin. Bitcoin was the first to introduce a decentralized crypto secured currency. Bitcoin originally began trading at just US $0.0008. By February of 2011, the price of Bitcoin officially reached US $1.00, making it equal to the U.S. dollar.
How many types of cryptocurrencies are there?
Bitcoin is by far the largest and most recognizable name in crypto with more than 40% of the market share. There are currently thousands of different types of cryptocurrency with more being created regularly. Ethereum and Tether round out the top three cryptocurrencies. If you plan to purchase cryptocurrency, it is important to purchase from a reputable site. Cryptocurrency gives you a chance to invest in areas that best suit your needs and lifestyle.
Is cryptocurrency accepted at the stores I frequent?
Unfortunately, the number of retailers accepting cryptocurrency is rather limited. Amazon, Target, and Walmart do not currently accept any sort of cryptocurrency payments. A few notable retailers that do accept either Bitcoin or some other form of crypto include Home Depot, Starbucks, and Microsoft. The list of companies is certainly expanding, and more retailers, restaurants, and businesses are expected to begin accepting Bitcoin and other cryptocurrencies in the near future.
What are some advantages to using cryptocurrency?
Since cryptocurrency is digital, you’re able to conduct transactions whenever and wherever. Crypto eliminates the need to carry physical money and can be bought or traded anytime. There are little to no fees involved in the buying or selling of cryptocurrency, making it cheaper and easier than cashing a check or paying via credit or debit card. The cryptography used to secure the transactions is rather solid. There is minimal risk of your crypto wallet or transactions being compromised.
What are some disadvantages to using cryptocurrency?
The biggest disadvantage at this time is the limited number of businesses that accept crypto as payment for day-to-day transactions. The market for crypto currency is also very volatile and changes quite frequently. And there are questions about the environmental impact. Cryptocurrency is still rather new to society as a whole and many people, myself included, are just not educated on the subject. With time, attitudes and perceptions will likely change, but for now, expect a few side-eyes and awkward looks when you mention crypto or the thought of investing in cryptocurrency as many are skeptical due to the newness of it all.
Overall, cryptocurrency is definitely the future of currency exchange. As its use and acceptance grow, so will the need to get onboard. It is important to ensure you are purchasing and trading crypto from a reputable company and as with all online transactions, look out for potential scams!
