I don’t really know what cryptocurrency is, and you probably don’t either. So here’s what I’m discovering:
- It’s digital.
- It’s not backed by the government, like fiat currency is, but you can use fiat currency to buy cryptocurrency.
- It has no real value.
- It is used more to invest and make a profit than to actually pay for things, but it can still be used to pay for things.
- Bitcoin is the most popular cryptocurrency, but there are lots of them.
- Blockchain makes cryptocurrency work. A blockchain is a chain of records on a network, and it exists for everyone who owns a cryptocurrency. Blockchain makes it impossible to just create numbers and engage in fraud.
- There has to be some sort of scarcity to make cryptocurrency work–if new cryptocurrency can be made, then it has to be some sort of regulated process.
- There has to be a way to verify and prove that you actually own and use cryptocurrency–this is related to cryptography, so there has to be strong security involved.
- You can mine bitcoin. Mining bitcoins is getting new bitcoins as a reward for auditing/verifying bitcoin transactions using computers doing intense computer things.
So could I start my own cryptocurrency? If I spent enough time and energy learning about computers and coding and blockchain, I could. But starting a new cryptocurrency doesn’t mean that it is worth anything.
Am I going to get cryptocurrency anytime soon? I’m not planning on it. But while I haven’t really trusted cryptocurrency, I still do trust the numbers in my bank and Venmo and Amazon and PayPal and the stock market–and cryptocurrency doesn’t seem that much crazier.
One thought on “8. What is cryptocurrency?”
I had wondered about this. Thanks for clarifying. I sometimes call it all funny money. A number here to a number there. Not really meaning much at all.