These days, it seems like everybody is talking about cryptocurrencies and bitcoin. Every news outlet that reports on the topic has its own idea about what bitcoin means for the future and what the implications of buying it are.
However, all of this speculation obscures one small thing: what cryptocurrencies really are. The 21st-century consumer is in a strange place where they might have read cryptocurrency news and still ask — what is cryptocurrency?
If you sound like this 21st-century consumer, you’ve come to the right place. This article will walk you through everything you need to know about bitcoin currency through three simple facts.
1. They Were Designed for Deregulation
When bitcoin (the first cryptocurrency) was first introduced by Satoshi Nakamoto in 2009, one of its main principles was to support the re-regulation of cash.
So far, throughout history, monetary systems have not been able to stay in place without federal regulation. The economy has needed the government to print bills and make sure said bills are not counterfeited.
However, bitcoin was created as a completely peer-to-peer currency, something that most other cryptocurrencies try to replicate.
The completely digital and non-fungible nature of the currency means that there doesn’t need to be any physical mint to print the money. The security gets handled by a system known as blockchain.
Speaking of which . . .
2. Blockchain and Crypto Are Not the Same Thing
Blockchain is another one of those terms that get thrown around a lot. There’s a lot of complications around it, but at the end of the day, all you need to understand about blockchain is that it’s a technology designed to make sure cryptocurrency actions are secure.
Blockchain was developed alongside Bitcoin as a system of checks and balances. Since there are no physical tokens traded, Satoshi Nakamoto realized that each individual bitcoin interaction would need verification.
The way it works is this — each transaction gets assigned a highly complicated serial number that nobody knows and is hidden behind a complex cryptogram. Independent contractors work to solve this cryptogram and get paid for their work — usually in the cryptocurrency itself.
The amounts of any specific cryptocurrency are usually limited so that each one becomes worth a lot of money. This means that fewer transactions have to take place.
3. There Are Over 1,000 Cryptocurrencies
If you thought it was all Etheruem and Bitcoin, you thought wrong. There are over 1,000 cryptocurrencies out there in the world today.
You have options as hype-based and unstable as dogecoin, and as stable as Tether. Do some research on some of the most popular and up-and-coming coins before investing so you find the right one for you.
For more information about bitcoin, check out this bitcoin for dummies article we found.
Understand Cryptocurrencies
If you want to understand our future, you have to understand cryptocurrencies. Know that they were designed for a de-regulated world, that blockchain is not the same thing as crypto, and that there are over 1,000 cryptocurrencies, and you’re more likely to understand bitcoin.
For more articles like this, check out our “investing” section.
