Cryptocurrency

 

What's Cryptocurrency?

Cryptocurrency is a medium of exchange that starkly differs from today's traditional currency. It is a purely digital currency and is usually wholly decentralized. Decentralization in a crypto context means no single entity or authority controls a cryptocurrency network. Instead, it operates on a blockchain, where transactions are recorded and verified by a network of nodes. This distributed nature ensures transparency, security, and resilience against failures or attacks. For example, the US currency is run by the US Federal Reserve, while Bitcoin, a cryptocurrency, has no entity that runs it. While the network verifies every transaction made with Bitcoin, it has no single person behind it.

Additionally, cryptocurrency is finite, meaning that no more of that cryptocurrency can be produced after hitting a certain threshold. On the other hand, the US Federal Reserve can and has printed money to help stimulate the economy. Therefore, cryptocurrency has become a prevalent currency mode for people who believe they experience higher financial independence.

Why Does it Matter to Me?

Cryptocurrency has often been in the news in a very positive light. People who found the Bitcoin they bought years ago became millionaires almost overnight. This has made many people think that cryptocurrency is a way to get rich quickly or something along those lines. To put it simply:

This is not the case:

Cryptocurrency is a financial technology with exciting possibilities, but it is also not regulated at the same level as other securities in the financial world. Having no central authority for the currency means that no one can indeed be held responsible when questionable things are done with the money. Unfortunately, this makes cryptocurrency a very popular vehicle for pump-and-dump schemes.