If you’re like me, then you’ve partaken in one or more conversations about bitcoin, or maybe you’ve only heard about it while overhearing a passing conversation. Regardless, even though just about everyone has heard of cryptocurrency by now, many of us still don’t understand what it is.
What is cryptocurrency?
Simply put, cryptocurrency is a type of digital or virtual currency. It is used as regular money, like dollars, pounds, euros, yen, etc., but does not have physical counterparts—coins or banknotes—that can be carried around; it only exists electronically. But just because you can’t physically hold cryptocurrency doesn’t mean it isn’t worth anything, as you have probably heard about the rapidly rising prices of virtual currencies and “why you should invest in bitcoin.”
Among the various ways that you can store cryptocurrencies, authenticated digital wallets provide the most security.
What is a digital wallet?
Most of us already use digital wallets. These are located on our smartphones and are where we store digital versions of our credit and debit cards (like Apple Pay, Samsung Pay and Google Pay).
To store a cryptocurrency, you’ll need to download a wallet for the specific currency you’re interested in, or you can leave it on the exchange account where you made the purchase. Keep in mind that keeping your cryptocurrency in your exchange account is less secure than keeping it in a digital wallet. Exchange accounts are more vulnerable to hacking than offline digital wallets because offline wallets typically employ layered-step verification.
How many cryptocurrencies are there?
There are over 13,000 cryptocurrencies in circulation, each with varying values. The first and most well-known of them is Bitcoin—developed in 2009 by Satoshi Nakamoto. The reason there are so many cryptocurrencies around is that it’s easy for anyone to create one due to the barrier of entry being so low. Anyone with the time, money, and knowledge of computer code could develop their own cryptocurrency.
However, for the most part, the majority of people just buy into the most popular cryptocurrencies. https://coinmarketcap.com/, as of January 2022, are:
- Bitcoin (BTC)
- Ethereum (ETH)
- Binance Coin (BNB)
- Tether (USDT)
- Cardano (ADA)
Why is crypto so popular?
In later blogs, I’ll discuss the popularity of cryptocurrencies, but here are a few reasons why crypto has maintained its popularity despite many critics.
1. Decentralization. Cryptocurrencies are entirely decentralized. In other words, no government, state, or bank has any control over them. They are governed by the cryptocurrency community.
2. Anonymity. When you open a wallet for trading cryptocurrency, there is no need to disclose any personal information. Cryptocurrencies like Dash ensure complete anonymity. This is highly attractive for the ultrarich who would previously wrap up their assets in real estate or other material goods.
3. Increasing Utility. The industry is constantly evolving, from new decentralized finance apps to blockchain games to non-fungible tokens (NFTs). Many retailers and service providers are also accepting cryptocurrency payments.
While the crypto world is popular, it has also given its critics many reasons to dislike it. That’s why I’ll be dissecting cryptocurrency and the problems and benefits it may pose for Canadian businesses and the economy. If you want to keep up-to-date with my thought process, subscribe to my blog or contact me so we can help each other understand what crypto’s future in Canada looks like.
