January 17, 2022
At its inception, cryptocurrency is typically decentralized digital money. Bitcoin, launched in 2008, was the first cryptocurrency and remains by far the biggest, most influential and most popular. Bitcoin and other cryptocurrencies, such as Ethereum, have grown up as digital alternatives to government-issued money.
The most popular cryptocurrencies, by market cap, are Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Some are similar to Bitcoin. Others are based on different technologies or have new utilities that allow them to do more than transfer value.
Cryptocurrency makes it possible to transfer value online without the need for an intermediary, such as a bank or payment processor, allowing value to be transferred globally, almost instantly, 24/7.
Typically, cryptocurrencies are not issued or controlled by any government and/or other central authority. They are managed by peer-to-peer networks of computers running free open source software. A cryptocurrency blockchain is similar to a bank’s balance sheet or ledger. Each currency has its own blockchain, which is a continuously verified record of every transaction ever made.
Unlike a bank’s ledger, a cryptocurrency blockchain is distributed across the entire digital currency network.
Cryptocurrencies make transactions with people on the other side of the world as simple as paying with cash at your local grocery store.
When paying with cryptocurrencies, you do not need to provide the merchant with unnecessary personal information. Which means your financial information is protected from being shared with third parties such as banks and payment services. And since no confidential information needs to be sent over the internet, there is little risk of your financial information being compromised or your identity stolen.
Almost all cryptocurrencies including Bitcoin, Ethereum, Tezos and Bitcoin Cash are protected with technology called blockchain, which is constantly verified by enormous computing power.
Since your cryptocurrency securities are not tied to a financial institution or government, they are available to you no matter where you are in the world or what happens to any of the major intermediaries in the global financial system.
Every transaction on the Bitcoin, Ethereum, Tezos and Bitcoin Cash networks is published publicly, without exception. This means that there is no room for manipulating transactions, altering the money supply or adjusting rules midway.
Unlike a credit card payment, cryptocurrency payments cannot be reversed. For traders, this greatly reduces the likelihood of being defrauded. For customers, they have the potential to make commerce cheaper by eliminating one of the main arguments credit card companies use for high processing fees.
What is the future of cryptocurrency?
Experts often talk about the ways in which cryptocurrencies can provide solutions to the flaws in the current financial system. High fees, identity theft and extreme economic inequality are an unfortunate part of our current financial system and are also aspects that cryptocurrencies have the potential to address. The technology that powers digital currencies also has vast potential beyond the financial industry, from revolutionizing supply chains to creating a new, decentralized internet.