Unless you’ve been living under a rock, chances are you’ve heard about “crypto,” aka cryptocurrency. While it may have seemed like a far-off concept just a few years ago, the reality is it’s becoming more mainstream. Significant companies, like Starbucks and AT&T, now accept it as payment, and payment platforms like PayPal integrate it for their users. So, whether you’re comfortable diving in or not, it’s helpful to be versed in the basics to keep up with the trends and make informed decisions.
What is Crypto?
The word “crypto” comes from the Greek kryptós, meaning “hidden,” which is a great place to start laying our foundational knowledge. Crypto refers to any digital or virtual currency that uses cryptography to secure transactions on blockchain technology. The “coin” is secured by cryptography, which makes it nearly impossible to counterfeit. Unlike the U.S. Dollar or the Euro, a central authority does not issue cryptocurrencies, and their value is determined not by the government but by crypto users.
What is Blockchain?
Blockchain is the type of database that the crypto transactions are tracked on. Investopedia explains, “A blockchain collects information together in groups, known as blocks, that hold sets of information. Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain.”
What is Bitcoin?
Think of Bitcoin as the Kleenex of crypto or the Botox of injectables. This is the first brand name to launch in the space in 2009, and as a leader, the name “Bitcoin” is sometimes used interchangeably with “crypto.” Other cryptocurrencies following in popularity are Ethereum, Tether, and Litecoin.
Where can you buy crypto?
Crypto can be “mined” or purchased from cryptocurrency exchanges – one of the most popular for beginners is Coinbase. While setting up an account is relatively simple, reading up on the fees before diving in is essential. For more advanced traders, there is Coinbase Pro.
What are the things to be concerned about?
While the lack of government oversight may appeal to some, it also means no regulations are in place to protect the asset’s value. For example, while many companies and platforms are now accepting crypto, it’s important to remember that if companies or consumers move to a new cryptocurrency from the one they have or stop using digital currencies entirely, it could lose value and become worthless.