In the era of “google it”- understanding what cryptocurrency is and isn’t can be overwhelming. Our goal is to demystify this unicorn and break down concept at its simplest form.
Here are 5 things you need to know about cryptocurrencies
Built on blockchain technology - A blockchain is a public, distributed network (acting as a ledger). Transactions can only be added to this distributed ledger and are verified by computers all around the world.
Main advantages of cryptocurrencies and blockchain technology:
Security: Transactions are recorded on a public ledger and can only be added to the ledger, eliminating risk of reversal of transactions. Security of blockchain kept by networks of computers around the world.
Efficiency: Any two parties can easily transact between each other from any part of the world, 24/7 365 days a year. These transactions can oftentimes be completed within minutes, regardless of transaction size.
Cost-saving: There are nominal fees paid for transactions of any amount to anywhere.
Accessible: Requires no bank account to operate, anyone with a mobile device or computer has access and can make or receive payments electronically worldwide.
Bitcoin was the first cryptocurrency, invented ten years ago. Currently functioning like a digital gold- it has a limited supply of 21 million Bitcoin and its price is uncorrelated to global markets. A global demand for an asset whose supply cannot be inflated has led to its price increase over the years.
No need for a third party to transact - this makes it censorship resistant and no percentage/fee of a transaction is lost to banks or credit cards.
Market Cap: Still in their infancy: the total market cap of all cryptocurrencies is $120 billion. In contrast, the market cap of:
Gold is $8.2 trillion
Physical money is $31 trillion
Stock markets (globally) is $69 trillion