In the course of just a few years, cryptocurrency (or crypto) has gone from relative obscurity to influencing aspects of everyday life. For outsiders looking in, it can seem like an uncrackable code made for the next generation. With the number of cryptocurrencies growing each day, those looking to jump into the digital waters can easily get in over their head.
Where did the sudden fascination with crypto begin? The astronomical rise of Bitcoin, the industry standard, is a central cog in creating the Beatles-like craze. But it is worth noting that, for every Bitcoin, there are thousands of alternatives that are likely to never show the life-changing returns that have made the craze so lucrative.
Before we dive into some of the more popular cryptocurrencies that are available, it is important to start from the beginning. In many ways, crypto has evolved into a living, breathing ecosystem that has its own terminology and societal construct; think, “Lord of the Flies”, without the boulder rolling over one of their own.
Let’s start with what cryptocurrency is, and more importantly what it is not. Cryptocurrency, in its most simplistic form, is digitized money that can be spent online for goods and services. Ok, so it is like a U.S. dollar or British pound?
Yes and no. Yes, in the sense that it can be saved and spent at the owner’s discretion. Unlike the U.S. dollar, or any other government controlled currency, crypto is completely decentralized. One way to think of this is as a casino chip. You can buy it from the front desk, but it loses its value outside of the ecosystem.
Crypto can be purchased using U.S. dollars, but can only be spent in certain places, and through certain processes, known as blockchain technology. These processes ensure security for all parties involved and create the market value of each specific cryptocurrency. Blockchain acts as a ledger, recording all of the digital transactions, helping to establish proof of work or proof of stake.
Ask any person on the street what they know about crypto, and chances are they will mention Bitcoin. Widely recognized as the gold standard, Bitcoin has led the charge in promoting crypto as the way of the future. Unlike government controlled currencies, Bitcoin is a fixed asset with only so many available in the world.
Originally, Bitcoin was “mined” using advanced computer software that solved incredibly complex mathematical equations. With its rise in popularity, the ability to purchase Bitcoin has become more readily available, causing value to skyrocket over the last 5 years. Today, it is largely uneconomical to mine the cryptocurrency as the computing power needed consumes more energy than it is worth. Bitcoin’s proven track record has set itself apart from the vast majority of platforms available.
Next to Bitcoin, Ethereum is currently second in line in the greater cryptocurrency world. Built on the same principles as their big brother, Ethereum looked to take the success of blockchain technology into ventures well beyond a decentralized currency.
Ethereum’s broader vision for blockchain includes an open-ended software platform where code can be stored and distributed securely. Housing its own coding language, the platform supports a virtually endless number of applications. Currently the primary use centers on encrypted financial contracts and decentralized software applications, referred to as dapps.
If you are researching cryptocurrencies and are interested in investing, you will inevitably come across dogecoin. Almost in spite of its comedic creation, the platform has seen a meteoric rise in popularity, garnering mentions from Elon Musk and other social influencers in recent weeks.
The meme-inspired crypto has seen a 12,000% increase in value in 2021 and shows little signs of slowing down. For those looking to invest, there is one major difference between dogecoin and more established platforms like Bitcoin and Ethereum.
Dogecoin is not a fixed asset platform. In fact, each day, 10,000 more dogecoin coins are issued. The built-in scarcity of other platforms has created security and trust. This fact alone could cause volatility in dogecoin’s value over time.
FAQs About Cryptocurrency
Throughout the article, we have thrown around terminology that is unique to the world of cryptocurrency. Because of this, we feel the need to address some of the common questions that our team encounters when discussing crypto as a whole.
Where can I find crypto?
The most logical place to start the conversation is where to find crypto. As we mentioned, most platforms only offer a fixed amount of their currency. Some might still offer mining as an option, but that does require advanced coding knowledge and massive amounts of computing power. Most people will find their way to one of the third party brokers, such as Coinbase, where they can purchase crypto with U.S. dollars.
What is blockchain and is it secure?
Blockchain seems incredibly complicated, but most people will find the concept pretty straightforward. Imagine a checkbook that records all of your transactions. Blockchain logs these transactions into blocks that are then chained together to form a chronological history of all of the transactions that have occurred.
These cannot be altered and, in the case of cryptocurrency, are visible to anyone that has access to the database. Transactions are stored as encrypted code, making them incredibly secure.
What is a wallet and how do you spend crypto?
Whether you are purchasing or mining crypto, chances are that you will eventually want to spend some of that hard earned “money.” While the number of vendors that are accepting crypto as a form of payment is steadily growing, it is not as simple as taking cash out of the ATM or swiping your debit card.
Digital wallets are the easiest way to access crypto as a form of payment, but they don’t actually store crypto. These apps store your keys, or credentials, that provide access to the crypto platform of your choice. Keys establish proof of ownership, allowing access to the fund.
Whether you are looking for insights into the latest cryptocurrency on Elon Musk’s must have list, or are checking the value of that dogecoin your neighbor convinced you to buy, having a reliable provider for when your technology goes down is critical. Whatever tech you have or fixes you need, contact us and we’ll lend a hand.