What is Cryptocurrency?

Photo courtesy of Lizeth Gonzalez

Most have heard the phrase “money doesn’t grow on trees,” but what if it can grow digitally? At least it can with cryptocurrency.

Cryptocurrency is decentralized digital money based on blockchain technology. It is essentially exchanging real currency for cryptocurrency to access goods or services.

Imagine going to an arcade and putting in tokens for a prize, this concept is similar to cryptocurrency. The tokens represent the currency, the tokens as the cryptocurrency and the prize as the good or service.

Unfortunately, actual cryptocurrency is a bit more complex than just winning a stuffed teddy bear at the end of the night. There is a key strategy put in place to protect everyone’s money.

One of the things that makes cryptocurrency unique is its blockchain technology system. In an article on Nerd Wallet, the blockchain system is described as a decentralized technology spread across many computers that manage and record transactions.

Instead of all of your transactions being in one place like a standard bank account, it is spread across numerous different computers around the world.  With the transactions spread throughout numerous computers, security-wise, it should be hard to hack into than having it all under one system.

This is one of the reasons why some people feel so comfortable using cryptocurrency. Many companies know this and capitalize off this information and no company has done it better than Bitcoin.

Twelve years after its launch date, Bitcoin is still leading the pack of cryptocurrencies in terms of market capitalization, user base and popularity. One Bitcoin is equal to $47,418.96 U.S. dollars. This statistic alone is why when people think of getting into cryptocurrency, they think of Bitcoin.

Companies like Bitcoin almost seem too good to work and for some people that might be the case.  With that, it is easy to assume that cryptocurrency is just a get rich quick scheme. This is neither true nor false because there are pros and cons to it altogether.

The only thing worth recommending would be to do a great amount of research before getting deeply involved.

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