In the last post, we covered the basics of blockchain technology, along with the advantages and and the challenges of it. As discussed previously, blockchain was designed for the use of bitcoin, which would be a means of payment for people to send to one another across the globe, decentralized and fast.
While bitcoin is the most popular and well known cryptocurrency out there, there are many others that are making a name for themselves, including ethereum, litecoin, dogecoin, etc. In future posts, we will discuss these different payment methods in length, for we need to understand what it means when we talk about cryptocurrency, or "cryptos."
What is the meaning of the word?
In a nutshell, cryptocurrency can be broken down into two parts. The first part, "crypto," alludes to the cryptography techniques used to secure transaction records, create new coins, and to verify the transfer of coin ownership. The other half, "currency," is the means to exchange things of value.
So why cryptos?
With ongoing economic challenges, including inflation, consumer debt, etc. people seek other means of not only to provide for their needs, but also to have a store of wealth to keep their temporal wellbeing secured. Other stores of value include gold and silver, but they may not be easy to obtain. With cryptocurrency, it can be that store of wealth or as a means of transaction. However, I do fully endorse the use of gold, silver, and other precious metals, to diversify assets and protect your financial future.
Community Driven Value
While there are a few ways cryptocurrency becomes minted (While we will talk about in future posts), it's value is primarily determined by the community that uses it. Think about the housing market right now, but replace the cost of living as a type of value. The more people move to a certain neighborhood or community, the higher value that area has because it is influenced directly by the consumer.
Additionally, cryptos gain value by being accepted by mainstream institutions. When Elon Musk originally announced that Tesla would accept bitcoin as a means of buying their products, that made the price of a single (yes, a single) bitcoin go up to be $63k!
Another example is Lolli, which is a rewards application that helps you earn a percentage of bitcoin as cashback when you shop or purchase items from a business that has partnered with them.
What are the current challenges to using cryptos?
While the challenges to using cryptocurrency can vary, they all stem from one root cause: education and public awareness surrounding bitcoin, dogecoin, etc. Cryptocurrency is still relatively in its infancy, being approximately 10 years old or so.
Secondly, given that it is still young, it is still volatile, meaning the price can go up or go down for cryptos. However, over the past few years, there is a type of crypto called "Stabilecoin" that has grown in both use and popularity. Essentially, a stabilecoin's value is pegged to another currency or commodity, meaning it's price is the same as what it is attached to. Take for instance the crypto called Tether. It is attached to the US dollar, meaning no matter what happens in the crypto markets, a single Tether coin is still equivalent to the value of one US dollar.
This and other cryptos like it can help facilitate a smoother transition for people to start using cryptocurrency. Also if you want to learn more about how to start using cryptocurrency in daily life, I highly recommend the following individuals and groups and where you can find them. Please note, these are recommendations, not paid endorsements.
Bitcoin Ben (on Rumble, Facebook, Patreon)
Fintech School (https://www.fintechschool.com)
Ivan On Tech (https://academy.ivanontech.com and https://www.youtube.com/user/LiljeqvistIvan)
Coinbase (https://www.coinbase.com/)
Let's wrap this up
I believe that cryptocurrency is here to stay. It is another alternative to not only for use in all we do, but also as a store of wealth to provide for yourself or your family. Now that we have laid the foundation for both blockchain and cryptocurrency, we will now dive into different cryptos, blockchain projects, and industries that are using them.
See you here!