Cryptocurrencies let you buy goods and services, or you can trade them for profit. Here's more about what cryptocurrency is, how to buy it and how to protect yourself.
A cryptocurrency (or “crypto”) is a digital asset that can circulate without the need for a central monetary authority such as a government or bank. Instead, cryptocurrencies are created using cryptographic techniques that enable people to buy, sell or trade them securely.
Bitcoin and most other cryptocurrencies are supported by a technology known as blockchain, which maintains a tamper-resistant record of transactions and keeps track of who owns what. The creation of blockchains addressed a problem faced by previous efforts to create purely digital currencies: preventing people from making copies of their holdings and attempting to spend them twice.
Individual units of cryptocurrencies can be referred to as coins or tokens, depending on how they are used. Some are intended to be units of exchange for goods and services, others are stores of value, and some are mostly designed to help run computer networks that carry out more complex financial transactions.
An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes. As with any frontier, there are unknown dangers, but also strong incentives. Explore the kinds of questions and insights enterprises should consider as they determine whether and how to use digital assets.
More than 2,300 US businesses accept bitcoin, according to one estimate from late 2020, and that doesn’t include bitcoin ATMs. An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes.
The use of crypto for conducting business presents a host of opportunities and challenges. As with any frontier, there are both unknown dangers and strong incentives. That’s why companies venturing to use crypto in their businesses should have two things: a clear understanding of why they are undertaking that action and a list of the many questions they should consider.
Two primary paths for using crypto
The first question to ask when considering using crypto in your company’s operations is: Do we hold crypto on our balance sheet or simply adopt crypto-enabled payments? To determine the right path for your business, you need to make a careful determination of the best fit for your business objectives. Consider the potential benefits, drawbacks, costs, risks, system requirements, and more. The following sections will provide some broad considerations around two different paths as your company embarks on its crypto journey.
NerdWallet has created guides to some widely circulated cryptocurrencies, including Bitcoin and some Bitcoin alternatives:
Bitcoin is the first and most valuable cryptocurrency.
Ethereum is commonly used to carry out financial transactions more complex than those supported by Bitcoin.
Cardano is a competitor to Ethereum led by one of its co-founders.
Litecoin is an adaptation of Bitcoin intended to make payments easier.
Solana is another competitor to Ethereum that emphasizes speed and cost-effectiveness.
Dogecoin began as a joke but has grown to be among the most valuable cryptocurrencies.
Stablecoins are a class of cryptocurrencies whose values are designed to stay stable relative to real-world assets such as the dollar.
» Learn more: What is blockchain, and how does it work?
Best cryptocurrencies by market capitalization
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