Cryptocurrency is everywhere these days. You can’t turn on the news or scroll through your Twitter feed without seeing something about Bitcoin or #DogeArmy. If you’re not familiar with the world of crypto, it can leave you feeling confused and overwhelmed.
Today, we will walk you through Cryptocurrency 101. If you are more of a visual learner, watch our latest Tech Tip video to follow along with tech expert Katie.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses cryptography to secure and verify transactions, making it virtually impossible to counterfeit. The first and most famous form of cryptocurrency, Bitcoin, emerged in 2008, but today there are thousands of alternatives on the market.
How Does it Work?
Unlike cash that you carry in your pocket and exchange for goods and services, cryptocurrency exists as digital entries to an online database called a blockchain. A blockchain is an open, distributed ledger that records transactions in code. Think of it like a virtual checkbook that’s distributed across millions of computers around the world. Everyone who uses a cryptocurrency is given their own copy of this checkbook to create a unified record. Software logs each new transaction in real time, and every copy of the blockchain is updated with the new information.
How Do You Use It?
You can use cryptocurrency just like cash to make purchases, but it’s not a universally accepted form of payment yet. You can work around this by exchanging crypto for gift cards to select retailers and restaurants with services like eGifter. You can also sign up for BitPay, a debit card that converts cryptocurrency into dollars.
Finally, you can invest in crypto. Cryptocurrency can be purchased on peer-to-peer networks and cryptocurrency exchanges, such as Coinbase, as well as investing apps like Robinhood. But before you go buying into Bitcoin, there are a few things you should consider. First, do your research. There are more than 500 exchanges to choose from, so read reviews and talk with experienced investors before diving in.
And because crypto is highly speculative, be prepared for dramatic ups and downs. While Bitcoin reached a price of over $18,000 per coin in November 2020, it bottomed out at under $5,000 in the same year. If your blood pressure or investment portfolio can’t handle the rollercoaster that is crypto, you may be better off sticking to stocks and bonds.
We’ve only scratched the surface today, but hopefully with this background knowledge you can decide whether crypto is right for you—or at least understand what people are talking about when they bring up Bitcoin. That’s it for this edition of Tech Tips! Check back soon for another tip to make your technology work for you.