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What are Cryptocurrencies?

A cryptocurrency is virtual/digital currency that can be used as a method of exchange like cash, but is protected by cryptography. Cryptography protects cryptocurrency from being double-spent or counterfeited. Most cryptocurrencies are blockchain tech-based decentralized networks, a distributed ledger called blockchain that is enforced by a different network of machines and computers. This allows these cryptocurrencies to be more resilient and less fallible to hacking and illegal acts such as counterfeiting.

Cryptocurrencies are currencies that use digital “tokens” to make secure online payments that are represented by the system’s internal ledger entries. Cryptocurrencies are called “crypto” because the currencies use cryptography and different encryption algorithms to secure the ledger entries.

Types of Cryptocurrency:

You may have heard about cryptocurrency, like people trying to convince you to invest in cryptocurrency. Some of the most famous types of cryptocurrencies include Bitcoin and Bitcoin Cash, Peercoin, Litecoin, Cardano, Namecoin, NEO, Stellar, and Ethereum. The first modern cryptocurrency is generally regarded to be Bitcoin. All these types of cryptocurrencies are built similarly, with most using blockchain technology, and for the same purpose.

Pros & Cons of Cryptocurrency:

Some benefits of cryptocurrency include having more user self-control rather than depending on a middleman like a bank or the government, having the ability to make more discrete payments like traditionally paying with cash, no banking fees, ease of mobile payments where the cryptocurrency can be bought from anywhere with internet access, and low transaction fees when wiring the money internationally.

Some disadvantages include cybersecurity, as cryptocurrencies while secure can still be hacked, and that while it uses modern technology they cannot compete with more traditional payment companies like Mastercard and VISA.

To anything, there are always pros and cons. Maybe you believe that cryptocurrencies are the future and want to invest in them. Or, you believe that cryptocurrencies are too risky without enough potential reward. Whatever you do, always do some more research. If you invest, be sure to understand the cryptocurrency’s company and its strengths and weaknesses. Happy learning!

Written by Allie Chang

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