When referring to cryptocurrency, we are referring to digital assets that hold value much like fiat (normal) money used to buy goods and services. While fiat money is physical, with its value held in the coins and notes of a particular currency, cryptocurrencies are digital and exist only online.
These cryptocurrencies are essentially lines of code that use cryptography to encrypt and protect them. Hence the name, crypto + currency. Cryptocurrencies have many different uses, however, most offer a medium of exchange and a store of value.
Where Do Cryptocurrencies Come From?
In 2008, an anonymous entity Satoshi Nakamoto introduced the world to this new concept through a whitepaper outlining Bitcoin and the technology behind it, blockchain technology.
Bitcoin was presented as a peer-to-peer electronic cash system, a way to manage value without running it through a bank or organization, and rather from person to person. Bitcoin allowed people to send money from their account directly to their friend’s account without going through a bank, and instead of using a decentralized network on the blockchain.
Blockchain technology is similar to a digital public ledger. All the transactions are verified by the decentralized nodes that connect the network and are presented in chronological order, with no way of going back and tampering with them.
Once a Bitcoin transaction has taken place, it is entered into the blockchain (a transparent digital chain of blocks that each hold transaction history). Every Bitcoin that has ever been sent is stored on this blockchain and remains anonymous unless you know the address of who sent or received the cryptocurrency.
Cryptocurrencies vs Blockchain
Different projects use different blockchains that require different cryptocurrencies to operate them. These currencies hold the value of the project, while blockchain technology is the backbone of the project. When people refer to cryptocurrency they are referring to the instrument of value, similar to the US dollar or Euro, while blockchain is simply the technology that operates the project.
Blockchain, however, has many different use cases outside of the financial sector. The technology can be used in anything from supply chain management, to dairy farming, to property. The technology allows for transparent logging of information that can be accessed by a private (within the company) or public (anyone within and outside) group of users.
You might have heard about different cryptocurrencies like Ethereum, Solana, Bitcoin Cash and Tether. Each of these is unique in its product offering, but all use blockchain technology to operate.
For example, Ethereum is a platform that allows developers to build dApps (decentralized apps built on blockchain technology) through the use of smart contracts. In order to use the services of the platform, users need to pay in Ether, which is the name of the cryptocurrency. When you see Ethereum (ETH), Ethereum refers to the platform in its entirety, while ETH refers to the name of the tradeable digital asset.
Why Is Cryptocurrency Valuable?
Since Bitcoin’s creation, many more cryptocurrencies have come into existence. According to CoinMarketCap, over 5,000 cryptocurrencies exist today, many solving useful problems and some less so.
Many cryptocurrencies are designed to be deflationary, meaning that they do not devalue as a result of inflation as fiat currencies do. Looking at Bitcoin, Satoshi Nakamoto designed it to only ever have 21 million in circulation.
This means that once the last Bitcoin is mined (released into circulation), there will never be any more. With its finite supply, this in turn means that the value can only increase over time, as the supply decreases, the value increases. Unlike fiat currencies where more money can be printed at any stage, therefore adding more to the system and decreasing the value.
Having said that, not all cryptocurrencies are valuable. Their values are largely connected with their use case, and how much demand there is for that particular coin. As demand increases, so do its value. As awareness and adoption have increased with Bitcoin, so too has its value, going from roughly $100 in 2013, to $20,000 in 2020.
Here are 6 other cryptocurrencies that are worth looking into in the industry.
How Do I Get Started With Cryptocurrency?
You will need to decide which cryptocurrency you are interested in purchasing, it is always a good idea to understand the project behind it and its use case in the industry before investing, as with anything. Next, you’ll need to set up a crypto wallet in order to hold this cryptocurrency.
Next, you’ll need to actually purchase the cryptocurrency. There are many exchanges out there that can facilitate the practice, some more complicated than others. At Oobit we’ve designed everything from the process of purchasing Bitcoin and other cryptocurrencies to the process of storing them, to be as simple as using traditional money.
At Oobit, users can easily purchase crypto with their debit or credit card, and then store them in a military-grade crypto wallet that keeps everything safe and under one secure password. Managing your cryptocurrencies doesn’t need to be rocket science, you just need to find the right platform.
Steps To Buy Crypto
1. Open an Oobit account
2. Purchase the cryptocurrency of your choice
3. The funds will automatically be stored in your unique crypto wallet that is part of your account.