Crypto EDU

Cryptocurrency

  • September 7, 2021
  • Beginner
  • investing
  • money
Cryptocurrency icon 01 Large

Unlike fiat currency—e.g., dollars or euros—cryptocurrency is not issued or controlled by a central authority. It flows from account to account through encrypted transactions that are listed in a large, secure public ledger known as a blockchain. Also unlike fiat currency, cryptocurrency doesn’t correspond to any real-world object. When person A pays person B in cryptocurrency, all that happens is that person B’s balance increases and person A’s balance decreases. It’s just a set of transactions noted in the blockchain. No physical money—no physical anything—changes hands. 

For many people, the appeal of crypto is that transactions require no involvement by a third party like a bank or a government. Buyers and sellers can remain completely anonymous, and each transaction is secured by asymmetric encryption (the public and private key concept), which makes payments virtually impossible to falsify. 

Although some early forms of cryptocurrency, including Bit Gold, launched in the 1990s, Bitcoin is the first cryptocurrency to gain widespread adoption. In the years since, thousands of other cryptocurrencies—often referred to as altcoins—have been introduced. Some are exact replicas of the Bitcoin protocol, while others allow for more elaborate transactions, or employ alternative methods of mining coins and tokens.

Different coins have different uses, making the term “currency” potentially misleading. Though a cryptocurrency can certainly be used to pay for goods and services, like any other currency it can also serve as a store of value or a speculative investment. The term can also include tokens used for highly specific purposes within a certain network. Ether, for example, is used not only to buy goods and services but also as a way to perform operations on the Ethereum platform. As such, it is often more accurate to refer to many of these tokens and coins as “crypto assets.”

Why should you care about cryptocurrency?

At Makara, we see cryptocurrency as a chance to invest in future technology. It removes middlemen while enhancing security. And, maybe most important, it democratizes finance.

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