Digital currency is becoming a reality for all of us whether we are ready or not. As much as everyone is most familiar and comfortable with coins and paper money, those days may be over a lot sooner than we thought.
When we’re buying things directly from our devices, it will all become a world of money that we can no longer hold in our hands.
There is a kind of digital currency that is getting the most attention, called cryptocurrency. Whether you have heard about Dogecoin, Bitcoin, or Ethereum, those are all different sorts of cryptocurrencies.
None of these have any physical form to them. And just because Bitcoin has ‘coin’ as part of its name, it is not a physical coin. It is a digital store of value. When you obtain Bitcoin, or fractions of bitcoin, that amount you hold is recorded in a way that can be compared to how a bank tracks how much money you deposited into your account.
Common across many cryptocurrencies, the record of the amount you hold is stored not in a bank but on a public ledger. Public means that somebody knowing your cryptocurrency address can see precisely how much crypto you have with this address, like an account number. This cryptocurrency ledger is maintained globally with technology known as the “blockchain.” The blockchain of a cryptocurrency is constantly maintained using a vast network of computers connected via the Internet. Leading cryptocurrencies such as Bitcoin or Ethereum have no central headquarters or a government that regulates them. That is entirely different from traditional paper money or “fiat money” issued from a government, such as the US Dollar, Euro, etc.
Consider the value of gold. It is also a valuable store of value that is not regulated by any government. Along this line of thinking, Bitcoin is thought by some to be a “digital gold.”
But the question remains, why is digital currency becoming so important right now?
From all of the rapid changes in the world, it is clear that the race is on to make all things digital. Such is the evolution of technology.
Almost all communication is digital, and now the same thing is happening to everything in the financial world. These new digital currencies, or cryptocurrencies, go hand in hand with how we already live our lives each day on the Internet.
There are other reasons as well. Another massive reason for cryptocurrency is that it allows people who have no access to banks to store their money securely online using nothing more than a smartphone. Once stored as cryptocurrency, their funds are held securely across the world. In this way, the cryptocurrency cannot be seized by a government.
The money issued by governments is known as fiat currency. In times of economic inflation, fiat currency will decrease in value. The theory is that a cryptocurrency like Bitcoin can remain more valuable than any fiat currency. Bitcoin has a finite number of 21 million. The amount of fiat currency that can be printed by a government is unlimited. Anything finxite will increase in value with distribution as it becomes more scarce. Year after year, it has been observed that the value of Bitcoin is increasing while other fiat currencies like the dollar are decreasing.
When it comes to wealth, a mere 57 people hold much of the entire world’s wealth. With the rise of cryptocurrencies, I believe we have a chance of seeing wealth become more distributed. Cryptocurrency has the potential for people to upgrade their savings in the process. A typical checking account will often provide not even 1% interest on your money deposited. Your crypto money can often return 10% and upwards, but that is not guaranteed. If the cryptocurrency market is healthy and the investment in crypto returns far above 10%, we will hopefully not have to worry about paying the bills. By adopting cryptocurrencies, we improve our chances of avoiding becoming slaves to billionaires who control most of the world’s wealth.
The cryptocurrency market is constantly changing, and sometimes the value of the cryptocurrency can change a lot in a few hours. This is much like the stock market, or even like gold and silver markets. Crypto markets, however, are more volatile and even risky in some ways.
Just as with stocks, cryptocurrency prices can be rigged by news in the media. Each time there is news about a foreign country, like China or India, banning cryptocurrency, the price sinks down for a while. But in the case of the stock market, the Robinhood exchange proved how powerful companies can manipulate the stock market by halting trading. Can the Robinhood scenario have played out in the digital currency world? The answer is no. Crypto cannot be stopped the same way a stock market can be controlled because it is decentralized.
Unlike the stock market, The network that runs cryptocurrencies is distributed worldwide, and the market never stops. The blockchain that serves as the value of your cryptocurrency holdings is stored not in any one place as there are numerous copies worldwide. Yet, there is only one key to that crypto that you hold.
So does that mean that the cryptocurrency you hold can be stolen? Yes, that is possible; however, that is preventable as long as you are very careful about your smartphone, computer security, and key-storage. Many people were careless with how they stored their key on paper or lost the only copy on their computer. Some people lost what would be millions of dollars today.
The access for anyone to get your crypto is almost every time because of a simple mistake. Avoiding those mistakes, your money is safer than any physical bank in the world, and the best part is you are in control of it.
Your money is stored securely by your own secret, private key. It is like a very long password that works to unlock your crypto money anywhere in the world. Keeping this key safe is all up to you. If you lose it, you lose your money. No help desk can save you in this case. The risk is all yours.
If you are new, or just think that keeping track of this single key sounds too risky, then starting with a crypto exchange may be precisely what you are looking for. You can set up an account on a centralized exchange such as Uphold. They can store your crypto keys, but you give up a little bit as far as control of your cryptocurrency until you transfer it to your own personal crypt wallet. It is an excellent way to start with cryptocurrency. See the links below where both of us can get a bit of extra crypto if you sign up to Uphold with my link.
So is everyone able to get cryptocurrency? I believe the answer is yes. It is not just for the rich, but for everybody. I can already hear the following question: If the cost of a single Bitcoin is thousands of dollars, what can anyone do? Well, I have an answer to that question.
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