The most popular question we receive is “What is cryptocurrency?” It’s a good one. We don’t claim to understand everything about cryptocurrency, but we will try to explain the basics.
The most important thing you need to know is that there are a lot of cryptocurrencies. They are all named something different, and there are thousands of them. But the ones that you really need to know about are Bitcoin and Ethereum.
Bitcoin was invented in 2008 by someone who calls him- or herself Satoshi Nakamoto. He or she used the pseudonym to keep secret the fact that he or she was an individual, because government officials were trying to shut down Bitcoin at that time.
Bitcoin is basically just a way to get some money out of thin air. All you have to do is send your computer some data and wait for it to arrive at another computer somewhere in the world via the Internet, where someone has agreed to accept it in exchange for money. It’s like sending a postcard: you can’t see who you’re sending it to, but they do receive it and can pay you back with money. And if they don’t, they lose nothing but their postage stamp – which they can always print again and send again.
Bitcoin came into being when Satoshi Nakamoto sent
Cryptocurrency is a form of money that uses cryptography to keep transactions secure and verified in a distributed public database called the blockchain. Cryptocurrencies allow people to send money quickly and easily without the need for a traditional financial intermediary like a bank or credit card company.
Cryptocurrencies are gaining popularity and becoming more commonly accepted all over the world, especially with businesses and in retail. You can use Bitcoin to purchase virtually anything online or in person if you choose, as well as physical goods, such as art or real estate. Cryptocurrencies are also starting to become accepted at some brick-and-mortar stores, such as Overstock, Expedia, and Microsoft.
Cryptocurrency has taken on a life of its own since it was first introduced in 2009 by Satoshi Nakamoto with Bitcoin. The cryptocurrency has grown so big that it is starting to rival fiat currency itself. You can even buy gold for Bitcoin!
For a decade, the financial press has been obsessed with Bitcoin, the cryptocurrency that went from being worth a few bucks to over $14,000 per coin in less than two years.
Without going into the details of Bitcoin or other cryptocurrencies, let’s just say that there are many different ways to invest in them, and it’s OK if you don’t know what any of them are. But here’s what you do need to know:
First of all, crypto-currencies are not money, or rather they are money but not the kind of money we generally think of. They exist as electronic records on computers. You can see them as software programs that have been installed on your computer. They use public key cryptography (which is how modern email works) to allow you to send and receive payments without having to trust each other. The protocol itself is open source; anyone can look at it and see how it works.
The protocol was created by Satoshi Nakamoto in 2009; there is no central authority making decisions about it. Instead, the network consists of thousands of computers around the world running software designed by Nakamoto and his colleagues.
Although they’re based on software and not physical objects, many people think they’re like gold. They’re used as a
Cryptocurrency is an alternative way to store and transfer money online. It’s a system that operates independently of governments and banks, and it uses cryptography to secure transactions.
It has been in existence for over a decade, but only in the past few years has it grown into a major means of payment. Its growth has been fueled by its many benefits: it is anonymous, not subject to fees or arbitrary limits, and can be transferred anywhere in the world instantaneously (if you have an internet connection). This makes it attractive to criminals and tax evaders, who find it useful for moving money around.
But it’s also attractive to people who want to send money abroad without paying fees or through borders that are inconvenient or don’t work well (like at least some of ours). And it’s attractive to investors who want an alternative way to make money while they wait for the stock market to recover.
There are many different kinds of cryptocurrencies, and most have a pretty good chance of being worth something someday. But there’s a difference between a speculative investment and the actual currency. Because it is not yet widely accepted as money, Bitcoin is not yet a cryptocurrency at all. It’s more like a hedge fund: invest in it now, and you get a share of the returns later, if there are any.
But that doesn’t make it useless. Cryptocurrencies are great for keeping your money safe from inflationary governments and banks; when inflation rises, real currencies go down, but cryptocurrencies go up. Bitcoin has also improved the privacy that digital payments usually lack.
Cryptocurrency is a form of money that is electronically held. This makes it more secure than cash, since you can’t lose access to your money if you lose your wallet. It also means that it can be transferred anywhere in the world at very little cost. Cryptocurrency has been around for a while—it’s just never been very popular. People have always used fiat currency (or “real” money) to make payments, so cryptocurrency has been something of a niche product—something for geeks and hackers and people who like to use computers to do things they can’t with regular money.
In the last few years, however, cryptocurrency has become more and more useful as a way to transfer wealth directly between people without using a bank or government or any kind of third-party intermediary. Much of this rise in popularity dates back to the financial crisis of 2008, when bank bailouts became politically unpopular. If you had stuff in the bank and it went bad, you were screwed: you might not get all your money back, you might even have to pay taxes on it. Many people decided that instead of putting their life savings into boring things like stocks and bonds, they would put them into Bitcoin or other cryptocurrency instead, where there was no risk at all and
Bitcoin is an example of a cryptocurrency. In the simplest sense, a cryptocurrency is a way to store value in the form of computer files. The first one was Bitcoin, invented by a person or group that goes by the pseudonym Satoshi Nakamoto. Bitcoins are virtual coins that you can use to buy things online, like pizza. Or you can trade them for other currencies.
Modern cryptocurrencies are similar to traditional money in some ways and different from it in others. They’re all digital, and they’re all used to pay for things online like pizza or hotels. But they’re also more volatile. If you make a purchase with your credit card, you know how much you paid and when it was charged to your account. With cryptocurrencies, that information isn’t always available.
Cryptocurrencies are still mostly used as an investment vehicle or an alternative way to make payments–and as such they deserve their reputation of being speculative and risky investments. However, there’s no reason why we should think that this is true. Cryptocurrencies have many different uses, and some of them seem very practical indeed. Most cryptocurrencies are designed to be secure and anonymous; they’re not intended to facilitate illegal activities like buying drugs on the Silk Road.