Cryptocurrency, or more commonly know as “crypto”, is a digital currency. Crypto is a private and secure way of moving money online, and is also used as store of value in portfolios.
Crypto started as a way to buy goods and services online between a small group of enthusiast, but has now become a very common form of payment.
Crypto uses Blockchain, which is a type of database that stores information in groups and sections, called blocks, and then chains them all together. When the information from the first block is passed into the second, it’s stored as a chronological series of events, which allows all the users to see the permanently-recorded activity in chronological order.
Bitcoin was the first of the digital currencies created and is the most well-known of the cryptos. It was first mentioned in its white paper in 2008 by an unknown figure or group known has Satoshi Nakamoto. Bitcoin gained fame because it represented an anonymous way to transact money, securely, with no governing bodies.
Bitcoin is also called a Token. Most of cryptos tokens are unregulated and run on decentralized peer-to-peer networks. As of 2021, data from CoinMarketCap.com lists over 10,000 tokens that are publicly traded on exchanges.
An exchange is platform where tokens are bought and sold with fiat or digital currency. Just like fiat currency, the value of digital currency is based on supply and demand. Once a token is acquired, it is stored in either an online or offline digital wallets. Offline wallets are referred to as cold storage wallets and are the most secure of all storage options.
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A Token is minted by the network miners when transactions are approved. Each time a transaction is completed, there is a reward given out to the person who solved it. Transactions are each given a cryptographic math problem and the first miner to solve the problem is awarded with the creation of a newly minted token. The transaction is then approved and entered into the blockchain ledger where it can not be changed or edited. With the creation of crypto, electricity and time have become money.
Crypto is built on the idea of providing privacy, security and freedom for its users. Its open source networks are peer-to-peer operated and end the middleman concept.
This helps to provide economic freedom to all, unlike fiat currency which is a physical (and digital) form of money that requires a central authority. A centralized authority controls the issue and value of its currency. Fiat in its digital form is not considered a cryptocurrency because it still needs a central authority.
Crypto and blockchains have expanded in scope from those early days and are now used for all types of projects from Wall Street to Main Street. What was once considered a fringe trend, has gone mainstream.
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