It’s hard to go two swipes on Twitter without seeing a billion mentions of cryptocurrency. Bitcoin may not go to the moon, but confusion around blockchain technology, DeFi, and Web 3.0 certainly has.
But understanding cryptocurrency is more than a party trick. It’s a necessity for understanding the future of art, banking, and every other industry on the planet.
This guide is a bite-sized introduction to the world of cryptocurrency
- What Is Cryptocurrency and How Does It Work?
- Why Is It so Important?
- How Do You Use Cryptocurrency?
What is Cryptocurrency? How Does it Work?
Since the world first met Bitcoin, thousands of cryptocurrencies have been born. But at its core…
A cryptocurrency is a decentralized digital currency that uses cryptography to securely verify transactions.
Like a national currency, cryptocurrencies can be used to buy and sell things: they’re money. Except instead of a central government saying it’s a legitimate way of making payments, buyers, and sellers (users of the cryptocurrency) agree upon that between themselves.
A single authority can’t keep track of every payment made with the cryptocurrency: it isn’t centralized. That’s where the ‘crypto’ comes in. Cryptography is used to encode data so that unauthorized parties can’t read or alter them.
Cryptocurrency transactions are recorded on a blockchain. This is a public database of transaction records (aka a ledger) that is maintained on a wide network of different computers. These records are encrypted with complex algorithms, which allows for two things:
- Verification. Transactions are public records, so everyone can verify them. (The coin owners’ identities are encrypted and anonymous).
- Security. Since the ledger is so widely distributed, manipulating the data is impossible.
Why Is Cryptocurrency so Important?
- Removing third parties. By sidestepping a central authority like a bank or credit card company, you can quickly send cash online for a fraction of the price. Even internationally!
- Free for all. To get access to financial systems, you need lots of paperwork and documentation. But Bitcoin, Ethereum, Dogecoin? Available to anybody. Cryptocurrency levels the playing field for everyone.
- Revolutionizing industries. Supply chains can be more efficient by using pipeline-specific coins. Artists can monetize their creations by minting cryptocurrency tokens. Crypto is even taking cybersecurity to new heights.
How to Use Cryptocurrencies
Cryptocurrencies are all different. Bitcoin is a store of value, Ethereum is more like everyday money. Coins like $XIASI reward community members by distributing revenue from transaction fees.
Whichever one you pick, research is important. Cryptocurrency market resources like CoinMarketCap provide details about coin prices, volume, and (you guessed it) market cap. Exchanges like Coinbase, Binance, and PancakeSwap will help expose you to the cryptocurrency market and different tokens.
The Future of Crypto
Currencies are becoming communities. Despite the media noise around cryptocurrencies, community-powered coins are doing extraordinary things.
Rally.io empowers digital creators to mint their own personal cryptocurrency. The $XIASI coin uses an anti-pump-and-dump protocol to protect the coin’s value for community members. They also plan to mobilize the community to raise funds for charities and build a platform for people to fund charitable causes online.
The future of crypto? It’s leveraging communities to create positive change.