Interested in cryptocurrency? Let’s Learn

The cryptocurrency industry is huge.

Even though the concept of bitcoin only gained widespread recognition ten years ago, it has grown to become a multibillion dollar industry.

During a turbulent year in 2018, the value of bitcoin shot up to almost $150 billion Canadian dollars before plummeting to a fraction of its previous value. As a result, the market caps of over a dozen other coins started to approach billions, catching up with bitcoin.

Additionally, Canadian cryptocurrency exchange QuadrigaCX recently experienced a complete collapse following the announcement of the death of its founder, depriving users of access to almost $190 million worth of digital currency.

Despite its rise, cryptocurrencies are still largely unknown to many non-techies. These are some of the questions you may have answered.

What is cryptocurrency?

Digital currency is what cryptocurrency is, but that’s not what sets it apart.

“We’ve had digital currency for years,” stated Ben Perrin, the host of an instructional cryptocurrency YouTube channel and head of marketing at BitNational, a cryptocurrency brokerage located in Calgary.

According to Perrin, only two to eleven percent of the world’s legal tender is thought to be physically present; the remainder is said to be digitally stored.

Anyone who pays with their debit card or Apple Pay more frequently than cash shouldn’t be surprised by that.

Rather, there are two key distinctions between government-issued legal tender and cryptocurrencies.

Decentralised and encrypted

Its name “crypto” comes from the fact that it is, first of all, encrypted. A particular kind of cryptography is used to verify the creation of coins and transactions.

Second, it eliminates the middleman because it is decentralised.

“Banks run on the fractional-reserve system, making them the intermediary between borrowers and savers,” Perrin stated.

Bank deposit and withdrawal records are all kept on file in a ledger. The remainder of that money is retained by the bank, with a portion going into circulation.

Like other ledgers, cryptocurrency ledgers are decentralised and are referred to as blockchains (more on that later). It eliminates the need for a central bank to oversee and retain the money by publicly recording transactions on servers located all over the world.

What makes cryptocurrency users tick?

The fact that cryptocurrencies are an independent currency system from banks and governments appeals to certain people.

Thus, in theory, it cannot be closed down by an unscrupulous government, and it would not experience a banking crisis akin to the 1930s stock market crash.

This is due to the fact that the majority of currencies aren’t governed by a centralised server or corporation.

Perrin said, “Like, compare Napster to Bittorrent.”