The word crypto has come to mean a lot of things, from digital currencies like Bitcoin to the technologies that support them, including NFTs (non-fungible tokens), DeFi (decentralized finance) trading protocols and more. All of them run on a technology called blockchain, which acts as a shared, encrypted ledger that keeps track of and verifies all transactions using a specific cryptocurrency. The beauty of blockchain is that no company, government or other third party controls it and anyone can participate.
The result is a highly democratic and open platform that has given rise to new forms of financial speculation and, in some cases, new kinds of money that can be transferred across borders without the need for central authority. Some of these new forms of money have found widespread use, from people sending remittances to family members abroad to Wall Street banks using them to settle foreign transactions. But crypto’s success has also inspired an explosion of experimentation outside of financial services, with everything from crypto social clubs and VR-based real estate to a whole new set of video games that reward players with digital coinage.
Crypto’s madcap, meme-crazed online culture can make it seem frivolous and shallow to outsiders, but the underlying technology is far from it. It draws on academic fields as diverse as computer science, engineering, philosophy, law and even art, and it spawns a bizarre world of subcultures, Discord servers and internet jargon that can make for strange bedfellows.
As the craze for crypto continues, it is increasingly challenging traditional power structures and the financial establishment that has long held sway in the world. This may be a good thing, but it can also create stark divisions between pro-crypto and no-crypto zones, as politicians all over the globe are forced to pick sides.
The fact that crypto is unregulated and unbacked means it’s not as safe as traditional bank accounts. Hackers and scammers can make off with your digital assets, and you have no legal recourse if something goes wrong. Additionally, if you lose your private keys for your crypto, there’s no way to get them back.
Crypto’s early days saw it used by people who wanted to avoid traditional financial institutions, including tax evaders and those buying illicit goods. But it’s now becoming a more mainstream tool for many, and there are now tools like stablecoins that aim to provide more stability than the volatile prices of other cryptos. Some of these stablecoins are pegged to existing currencies, like the dollar, and are audited by reputable third parties to ensure their accuracy. But others, like bitcoin, still experience volatility.
