Crypto is a new kind of money that uses encryption to transfer value securely. You can use it to buy goods and services online or in the real world. Many people also invest in crypto, trading it on exchanges for a profit. The most popular cryptocurrency is Bitcoin, which is based on blockchain technology. But there are other cryptocurrencies that run on different technologies, such as Ethereum software. This allows for innovations like smart contracts and non-fungible tokens (NFTs). And there are stablecoins, which try to avoid the volatility of other cryptocurrencies by pegging their value to existing currencies, such as the dollar.
Unlike traditional currency, which is printed by governments and stored in banks, crypto is digital and held in a secure wallet that you can control. Your wallet is a piece of software that verifies and stores your crypto, ensuring it’s safe from hackers. Because cryptocurrencies don’t rely on banks or other financial institutions, they’re available no matter where you are in the world or what happens to those institutions.
A growing list of online retailers and brick-and-mortar stores accept cryptocurrency as payment. Some even give you the option to pay with crypto when you check out. You can also use it to make donations to nonprofit organizations or to buy virtual land in a gaming world. Or, you can use it to tip creators of content that you enjoy, such as authors or musicians. There’s even a growing community of “crypto nomads,” who travel the world and live off of crypto income.
The security of crypto comes from a technology called a blockchain, which is a public record of transactions. The blockchain is verified by computers that run complex code. These computers are rewarded with crypto for verifying other transactions, which makes the blockchain a decentralized, trustworthy system that’s resistant to fraud and manipulation.
But just like the internet, the blockchain has flaws and risks. Hackers have found ways to exploit these flaws. Some of these vulnerabilities may be a result of poor design or malicious actors, but others could be the result of regulatory pressure or other forces outside of the blockchain community’s control.
One of the biggest risks to investors is a lack of liquidity. If there are no reputable exchanges that support a cryptocurrency, it’s hard to buy and sell. That’s why it’s important to research the market before investing in any cryptocurrency.
Getting into crypto can seem daunting, but it’s actually quite simple. Once you’ve bought some coins, they’re stored in an app on your phone or computer that lets you send them to other users or merchants. Some of these apps are intuitive and easy to use, while others require diving into the command line on your computer to program your transactions. However, even the most complex crypto transactions have a similar feel to using a mobile banking app. And with the growing number of cryptocurrencies in the world, you’re sure to find the right one for your needs.
