What’s cryptocurrency?
Cryptocurrency is a type of currency that uses digital files as money. It’s currency that exists on the blockchain and uses cryptography to make counterfeiting almost impossible. Because the funds aren’t issued by a central institution or government, on paper, they’re more or less insulated from government interference.
Token values are determined on exchanges that operate very similarly to stock exchanges where speculators HODL (“Hold on for dear life”) or trade their tokens. The price of the crypto then goes up and down as the market dictates.
Many cryptocurrencies are decentralized networks based on blockchain technology. Blockchain is a LEDGER database, or record-keeping technology. These blockchains keep track of the existence of cryptocurrencies. It stores information differently than a typical database. Blockchains store data in blocks, and chains them together. Think about it like this: as new data enters, it goes into a block. When that block is filled up with data, it’s chained onto the previous block. So it stores the information chronologically, or in the right order. Since it’s decentralized, no one person or group has control over it, but rather all users collectively retain control. The data entered into blockchains is permanent and irreversible.
Is Cryptocurrency Legal or Safe?
Yes, crypto is both legal and secure. As mentioned earlier, cryptocurrencies are usually built on blockchain technology. Since these blockchains are decentralized and the information is added chronologically, it’s very difficult to alter the contents of a block unless the whole group agrees. Each block contains it’s own “hash,” which is a math function made of letters and numbers, a timestamp, and hash of the block before it. If any data were to change inside the block, the hash would change, too.
So, is crypto legal? Overall, it’s important to look at cryptocurrency laws per country for specific information.
Where Did Cryptocurrencies Come From?
Cryptocurrency existed as an idea way before any of the technology existed to build it. Crypto’s technical start dates back to the 1980’s. As the years progressed and electronic payment transfers evolved, a 2008 white paper published by Satoshi Nakamoto described the first modern cryptocurrency – bitcoin. In early 2009, Nakamoto released Bitcoin to the public. By 2010, other cryptocurrencies started appearing, as well as the first public trading of bitcoin. Many different types of cryptocurrencies exist for different types of investors, as well as business and trading needs. For example, some cryptos may offer a faster transaction confirmation time, or provide solutions for blockchains to work together easier.
Cryptocurrency’s future outlook is still very much in question. Proponents see limitless potential, while critics see nothing but risk.
