You may have heard the term “cryptocurrency” in the news lately. It has certainly become a hot topic in the tech world and beyond. Here’s a breakdown of what this form of currency is and why it is important.
What is Cryptocurrency?
Cryptocurrency is, simply put, digital money. It can be used to purchase goods and services, as with any other type of currency. Some forms of cryptocurrency are unique to specific companies, which issue their own types of digital coins, called “tokens.” These tokens can then be used to purchase the specific goods and services that the company offers. There were approximately 5,392 unique cryptocurrencies as of 2020. Some of the more famous forms of cryptocurrency are Bitcoin, Ethereum and Tether.
How Does Cryptocurrency Work?
Technology innovators like David Walsh Bronxville know that cryptocurrency functions using a type of technology known as “blockchain.” Blockchain is a type of database that keeps track of cryptocurrency transactions in a way that prevents any one party from having control over the information. It is available to anyone who is a user. These records are also permanent, which means that past transactions can be viewed at any time.
What Are The Benefits of Cryptocurrency?
Users of cryptocurrency believe that this form of payment has many benefits. One of the most popular aspects of cryptocurrency is that it “cuts out the middle man.” This means there are no fees, and transactions can be completed more quickly and efficiently. Cryptocurrency is also touted as being more private than other forms of payment because of the decentralized blockchain system. According to Bronxville’s David Walsh, blockchain makes payments easier and faster, and increases the security of transactions. A third reason that cryptocurrency is viewed as beneficial is its potential to help those who have bad credit or are otherwise unable to open a bank account. Using cryptocurrency gives these consumers a way to build credit, and purchase goods and services.
How Can You Begin Using Cryptocurrency?
Buying certain types of cryptocurrency is easy, while others are harder to purchase. Bitcoin, one of the most famous cryptocurrencies, can be purchased with U.S. dollars. Some types of cryptocurrency, however, can only be purchased with other forms of cryptocurrency, making them hard to obtain. Before you begin using this type of payment, you will need a “wallet,” which is an app that contains your cryptocurrency. There are also online trading exchanges where you can use cryptocurrency to buy and sell other cryptocurrencies.
Cryptocurrency is clearly not going away anytime soon, so having some basic information is beneficial if you want to start using this popular form of online money.