Unless you have been living in a cave for the last 20 years then you have probably heard of cryptocurrencies and how they work. But not many people truly understand just what this is and the things they can do with it.
To help you understand crypto a little more, we are going to explore the many aspects of it, its brief history, the potential uses, and the challenges you may have to deal with if this is your first time using a cryptocurrency. If you have been having questions then you are in the right place.
What is Cryptocurrency?
Before anything else, let us first understand the basic concept of cryptocurrency. It is a digital form of payment that can be circulated and used without a need for a central monetary authority like the government making rules around it. Rather, it is a system that is created by advanced cryptographic techniques which allow people to buy and sell in a more secure way.
In a nutshell, with this kind of currency, you don’t have to worry about being hounded because it cannot be controlled by one person. You could conduct business with an MDF box manufacturer from another continent and no one will be able to track your transaction no matter what. This is why most governments and bank agencies have been fighting crypto all these years as it takes control away from them.
Types of Cryptocurrencies
As the popularity of cryptos continues to rise, we are seeing an influx of many cryptocurrencies that are cropping up as people are getting into the wave, seeing how secured they are. There are over 16,000 crypto types trading right now that can be used for anything from buying a house to importing high-value goods from any China wholesale supplier.
The table below illustrates some of the most popular ones.
|CRYPTO NAME||DESCRIPTION||MARKET CAPITALIZATION (USD)|
|Bitcoin||Made in 2009, this is considered the original cryptocurrency. As it is the first of its kind, it is the most popular and definitely the most expensive. In 2021, it was reported that is it the largest among cryptocurrencies.||923 billion|
|Ethereum||This cryptocurrency was created sometime in 2015 by Vitalik Buterin. Also known as Ether, Ethereum is another form of cryptocurrency that is stored in a blockchain. Next to Bitcoin, it is considered the most valued cryptocurrency.||470 billion|
|Binance Coin||The Binance Coin first operated under Ethereum, but now works under the Binance Chain. As its name implies, this cryptocurrency is issued by the Binance Exchange.||88 billion|
|Tether||Tether is another type of cryptocurrency based on blockchain. It was created by BitFinex and is being traded under the symbol of USDT, which is the fifth biggest crypto in the market.||77 billion|
|Solana||Solana was developed by Anatoly Yakovenko. It is widely popular as it is known to process transactions faster at much lower transaction fees.||57 billion|
|XRP||This is the ticket symbol of the tokens from Ripple, which is a digital and cryptocurrency payment platform for different financial transactions.||46 billion|
|Cardano||Considered as one of the most valuable cryptocurrencies in the market, Cardano currencies were developed by a co-founder of Ethereum. They can be bought and sold using US dollars are mainly used when paying services in their network.||45 billion|
|USD Coin||Created by the Centre, the USD coin is a type of cryptocurrency that has the same value as the US dollar. It is also referred to as stablecoin.||42 billion|
|Terra||Terra was created in 2018 by Terraform Labs along with its co-founders, Daniel Shin and Do Kwon. This cryptocurrency is offering more stability compared to Bitcoin and Ethereum. It is a type of stablecoin that also holds the same value as the US dollar.||34 billion|
|Avalanche||Avalanche is another type of blockchain platform. However, what makes it stand out is aside from offering efficiency, speed, and low costs, it also highlights eco-friendliness in its platform.||29 billion|
Why Are They Popular?
There are several reasons why cryptocurrencies are getting so popular as time goes by. Some of the notable ones include the following.
- It is the currency of the future and already some governments have adopted it since fighting it is proving to be futile. The realization that they cannot be controlled by one person or entity has made cryptocurrencies a very attractive option for people.
- You can do everything with your cryptocurrency from anywhere on the planet, all you would need is a good internet connection. Whether you want to trade in stocks or buy something simple like an office chair solution, all you would need is a smartphone and a crypto account and you are ready to transact.
- It is a secure form of payment that makes life very hard for fraudsters who had found ways to game the monetary system. Everything leaves a trail and this makes it easy for people to be tracked. This high level of safety has helped people to finally conduct business across the planet without having to worry about too much.
Challenges Facing Cryptocurrencies
As is with any new system, there are many challenges that cryptocurrencies and their proponents are currently facing across the globe. They include the following.
- There are too many options around and this makes it hard to know the ones that will last for very long and the ones that are genuine. With over 16,000 known cryptocurrencies, this can be too much for someone who is new to this technology.
- There’s difficulty in evaluating cryptocurrencies. There are no widely accepted metrics that institutions and even people can use to determine the true value of a cryptocurrency and this makes it hard for it to be widely accepted in areas that need it the most.
- They are not regulated products and although this is one of their biggest strengths, it opens up a door for a lot of problems. They don’t get the needed protection by the law since the existing laws have no way of defining cryptocurrencies, this increases risks for those that choose to involve themselves with this.
- It takes a lot to make cryptocurrencies. The power costs are astronomical and this has caused a lot of issues for people who try to get into crypto mining. Running into trouble with the law and government agencies is pretty common and this has slowed down the growth of the technology behind cryptos.
Cryptocurrencies are the future and anyone fighting them is in a losing battle. There’s no stopping the wave and it is only a matter of time before every single transaction in the world goes through some form of cryptocurrency. You can check online for more information to expand your knowledge on the issue.