What is Cryptocurrency: 28 things you need to know about crypto

What is cryptocurrency?

Source: Pixabay

If you’re completely lost by all the talk about blockchain, Bitcoin, and other digital assets, you may have wondered: what is cryptocurrency?

It seems like crypto has taken the world by storm. At its highest point, a single Bitcoin was worth a little over $60,000, and the digital coin even became an official legal tender in the Central American country of El Salvador.

Crypto glossary - 5 key terms you need to know about cryptocurrency

Cryptocurrency

Cryptocurrency is digital currency that runs on blockchain technology and is not dependent on a central authority to manage it.

Blockchain

Blockchain technology is a distributed ledger system that securely records cryptocurrency transactions using cryptography. Transactions are recorded across a global network of computers.

Decentralization

The concept of decentralization determines how cryptocurrency networks are governed. There is no central authority making decisions; instead, power is spread out equally among all the nodes on the network.

Crypto exchanges

Crypto exchanges are platforms where people can buy, sell, and trade different cryptocurrencies. There are two types: centralized, where transactions are managed by a central company, and decentralized, where people can trade directly with one another without any third party.

Fiat currency

Fiat currency, or hard money, refers to traditional forms of currency like the Euro or U.S. dollar.

Check out our full glossary for more terms you need to know about cryptocurrency!

Source: Photo by Quantitatives on Unsplash

What is cryptocurrency? - 7 FAQs about crypto

How many cryptocurrencies are there?

There are currently estimated to be around 12,000 different cryptocurrencies. This is because anyone is free to make their own coin or token, so new ones are constantly being created.

However, only a fraction of these are viable digital currencies. Many of the others are known as “memecoins,” or coins created around jokes and internet culture.

What’s the difference between crypto coins and tokens?

You might think “coins” and “tokens” refer to the same thing, but they don’t. Cryptocurrency coins are any crypto projects that have their own blockchain network. Tokens, on the other hand, are used for projects that are created on top of an existing blockchain network.

For example, Ether is the cryptocurrency coin of the Ethereum network. But MANA is the token used for a project called Decentraland, which was built on the Ethereum blockchain.

What can you do with crypto?

You can do many of the same things with crypto as you can with fiat currency:

• Investing
• Accessing crypto financial services such as loans and debit cards
• Lending out your crypto
• Staking your crypto on the blockchain to earn rewards
• Gifting crypto
• Spending crypto

While it’s true cryptocurrency isn’t widely accepted for making everyday purchases, there are several ways you can spend your digital asset at mainstream retailers, and some even take it directly.

Do you pay taxes on crypto?

Yes, you pay taxes on crypto whenever you sell or exchange it or receive it as income, whether through mining it or receiving it as payment.

Is cryptocurrency safe?

Despite its reputation as being used by criminals, cryptocurrency is definitely safe. You can avoid getting hacked if you take simple online safety measures like having antivirus software and avoiding clicking on strange links.

Where does crypto get its value?

It’s true that there is no tangible asset behind crypto that gives it value. But technically, this was also the case for many other means of exchange throughout history. Instead, people place value on a cryptocurrency if it demonstrates utility and they believe in the mission behind it.

Some cryptos, like Bitcoin, also have a finite supply, which gives it more value as demand increases.

Is crypto a good investment?

If you’re asking, “What is cryptocurrency?” you’re probably also wondering if it’s worth investing in. While it’s true cryptocurrency is notoriously volatile, it can definitely make a good investment, depending on your goals.

If you’re looking for a long-term investment, a crypto with a good growth history might be a good choice. If you’re interested in something more short-term, it’s still possible to see some investment gains, but it will require close attention to the market, where the prices of crypto can fluctuate by the hour. And just like any investment, only invest what you’re prepared to lose.

Source: Pixabay

What is cryptocurrency history? Important milestones you need to know about cryptocurrency 

Bitcoin white paper published - October 31, 2008

Satoshi Nakamoto, the creator behind Bitcoin, published the official white paper on the digital currency. Titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” it answered the question “What is cryptocurrency?” and detailed everything about how the Bitcoin system would work.

First Bitcoin purchase - May 22, 2010

The first purchase with Bitcoin was made by Laszlo Hanyecz when he traded 10,000 BTC for two Papa John’s pizzas. Just three years later, Bitcoin’s value would grow exponentially, meaning those pizzas would have been worth a little over $11 million by 2013. This purchase has become memorialized as Bitcoin Pizza Day.

Bitcoin market cap reaches milestone - March 30, 2013

Nearly five years after its initial launch, Bitcoin’s market capitalization officially surpassed $1 billion. It has remained the crypto with the highest market cap ever since, and it is also the crypto with the most institutional adoption.

Influential figures in cryptocurrency

Satoshi Nakamoto - creator of Bitcoin

Source: Photo by Jievani Weerasinghe on Unsplash

Satoshi Nakamoto is the anonymous creator of Bitcoin. To this day, no one is sure of his identity or whether he’s an individual or group. As the inventor of the first successful cryptocurrency, Nakamoto’s ideas have influenced every other crypto that has followed Bitcoin’s footsteps. This is why his name is one of the top things you need to know about cryptocurrency.

Vitalik Buterin - creator of Ethereum

Source: Forbes.com

Buterin published the Ethereum whitepaper in 2013 when he was only 19 years old after learning about Bitcoin only a couple of years before. A year later, the Ethereum network was officially launched, differentiating itself from Bitcoin through smart contract technology and decentralized applications (dApps).

Changpeng Zhao - CEO of Binance

Source: Forbes.com

Zhao is the founder and CEO of the crypto exchange Binance, the largest crypto exchange in the world in terms of trading volume. According to Bloomberg, he is the 11th richest person in the world with a net worth of $96 billion.

Zhao worked for various crypto companies before launching Binance in 2017. Binance has gone on to launch its own blockchain, the Binance Smart Chain, a decentralized exchange, and a Binance Coin (BNB), which is the fourth largest crypto by market cap.

Top crypto exchanges

With data from Coinmarketcap.com

Binance

Source: Binance.com

Trading volume: $18,049,739,681

Availability: Worldwide, except: Ontario, China, Malaysia, Japan, U.K., Thailand, Serbia, Bosnia, Iran, Myanmar. It’s important to note that Binance has a separate exchange for U.S. residents: Binance.US. In addition, Binane’s rules of operation vary from country to country to comply with regulatory authorities.

Coinbase

Source: freelogovectors.net

Trading volume: $3,422,801,956

Availability: U.S., Canada, U.K., Australia, Singapore, and 36 European countries.

FTX

Source: ftx.com

Trading volume: $1,904,411,594

Availability: Worldwide, except U.S., Cuba, Crimea and Sevastopol, Iran, Afghanistan, Syria, North Korea, Antigua, Barbuda, Ontario, and Japan. FTX’s rules of operation vary for countries and jurisdictions such as Hong Kong, Thailand, Malaysia, India, and Canada.  

Kraken

Source: logos-world.net

Trading volume: $859,768,051

Availability: Worldwide, except Cuba, Iran, Japan, North Korea. Kraken’s rules of operations vary from country to country to comply with regulatory authorities.

Top cryptocurrencies by market cap projected for 2022

Average 52-week price data from Coinmarketcap.com

Bitcoin (BTC)

Source: Bitcoin.org

Average 52 week low: $28,893.62

Average 52 week high: $68,789.63

Market cap projection: $2.7 trillion by 2023 (as of 2020, according to Bitcoinist.com)

Ether (ETH)

Source: commons.wikimedia.org

Average 52 week low: $1,560.37

Average 52 week high: $4,891.70

Market cap projection: $2 trillion by 2023 - 2025 (as of September 2021, according to CoinBazaar.com)

Tether (USDT)

Source: cryptologos.cc

Average 52 week low: $0.9974

Average 52 week high: $1.03

Market cap projection: $300 billion to $400 billion by 2024 (as of April 2021, according to Fxleaders.com)

BNB (BNB)

Source: Pixabay

Average 52 week low: $213.52

Average 52 week high: $690.93

Market cap projection: $1,076 price per coin by 2030 (as of March 2022, according to Capital.com)

USD Coin (USDC)

Source: cryptologos.cc

Average 52 week low: $0.9874

Average 52 week high: $2.35

Market cap projection:  $1.27 price per coin by 2025 (as of March 2022, according to Tradingbeasts.com)

Cryptocurrencies to watch in 2022

Price data from Coinmarketcap.com

Solana (SOL)

Source: cryptologos.cc

Current price in March 2022: $89.71

Top exchanges for buying and trading: Binance, OKX, Mandala Exchange, Bitget, FTX, and Coinbase

Why: What is cryptocurrency, and what makes it unique on the Solana blockchain? Solana was built to speed up transaction times and lower transaction fees. It’s already in the top ten cryptocurrencies by market cap, but it has the potential to grow even bigger as more people and investors support the project.

Avalanche (AVAX)

Source: cryptologos.cc

Current price in March 2022: $85.89

Top exchanges for buying and trading: Binance, OKX, Mandala Exchange, Hotcoin Global, Bitget, and Coinbase

Why: In 2021, Avalanche formed a partnership with Deloitte to use their blockchain technology to help streamline FEMA’s processes. Relationships with mainstream organizations like this show that Avalanche has a lot of growth potential.

Terra (LUNA)

Source: cryptologos.cc

Current price in March 2022: $88.25

Top exchanges for buying and trading: Binance, OKX, Mandala Exchange, Bitget, and FTX.

Why: Terra is a stablecoin project that uses an algorithm and smart contract technology to control the price of its coins. After its partnership with the Korean-based Chai payment platform and widespread growth in its user base, it’s worth watching to see how Terra grows this year.

Cardano (ADA)

Source: cryptologos.cc

Current price in March 2022: $0.8536

Top exchanges for buying and trading: Binance, OKX, Mandala Exchange, Hotcoin Global, and Bitget

Why: Cardano was the first proof-of-stake blockchain to become successful. This type of system is more environmentally friendly compared to Bitcoin and Ethereum, making Cardano a potential competitor to these networks. Many predict ADA will grow in the future as it continues to build out its network, so it’s worth keeping an eye on to see how the platform develops.

Chainlink (LINK)

Source: cryptologos.cc

Current price in March 2022: $15.03

Top exchanges for buying and trading: Binance, OKX, Mandala Exchange, Hotcoin Global, and Currency.com.

Why: Chainlink is an oracle service that collects all the data used by smart contracts. It has partnered with organizations like FedEx, FlightStats, and the Associated Press to help them verify data. It’s worth watching to see which organizations it partners with in the future and how that affects its growth.

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