What is Crypto?
What is Cryptocurrency?
If you’re thinking about investing, starting to invest, or are already investing and want to diversify your portfolio and perhaps gamble at the idea of becoming an overnight millionaire, you’ve probably started to think about cryptocurrencies as an investment option.
Maybe you’ve even put some money down on bitcoin and watched it bounce up and down, but mostly up, in the last several months hoping it’s going to hit the promised 90K, doubling your money.
But more likely, you’re hitting yourself over the head wondering why you didn’t buy bitcoins at thirty-two dollars a coin, when your friend first told you about it in 2011, because you thought it was nonsense.
Today, a lot of financial news contains stories about crypto, predictions, and expert opinions. Who’s right?
On one side you have one of the richest men in the world, Elon Musk, investing a billion dollars into bitcoin, with other world financial leaders following suit.
On the other hand, you have another one of the world’s richest men, Bill Gates, who according to Business Insider, isn’t bullish on bitcoin, and warned against jumping into the trade by saying that people who don’t have as much money to spare as Tesla CEO Elon Musk should watch out.
Then there’s the question of “which crypto?” and “which one’s going to skyrocket next?”.
With so many cryptocurrencies available, and such a volatile crypto market, being new to crypto it’s important to answer the basic questions, such as “is crypto a good investment?”, “where do I start?”, and “will cryptocurrencies hold over time?”.
So, what is crypto?
Let me be blunt, you’re not going to learn everything you need to know about crypto in a single blog post, so while there’s a ton to cover, let me back up and answer a more basic question: “what is crypto?”.
In its most basic essence, a cryptocurrency is a digital form of money that aims to decentralize currency.
The idea is that you are able to pay for online and also physical goods using cryptocurrency. Today, many companies are starting to warm up to the idea of accepting crypto, while others have already started.
According to Fundera, an online financial platform, as of December 2020, 2,300 companies across the U.S. accepted payment in the form of bitcoins, and upwards of 328,000 bitcoin transactions are processed daily.
Think of crypto as tokens in an arcade or casino chips. You can purchase them with dollars, and then use them within the arcade, or casino, to play. Well, in the real world and in the future, cryptocurrencies will be a common way to pay for everyday products and services.
Cryptocurrencies are created by complex computer programs and algorithms and are backed by a technology called a blockchain.
A blockchain is a technology that is spread across many computers. It manages and records every single transaction, in sequence.
While currently primarily used for cryptocurrencies, one of its most appealing features of blockchain is security. Blockchain technology can and will be adapted to everyday life transactions, products, and services.