what is crypto currency?

 At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet. Bitcoin, which launched in 2008, was the first cryptocurrency, and it remains by far the biggest, most influential, and best-known. In the decade since, Bitcoin and other cryptocurrencies like Ethereum have grown as digital alternatives to money issued by governments.

• The most popular cryptocurrencies, by market capitalization, are Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Other well-known cryptocurrencies include Tezos, EOS, and ZCash. Some are similar to Bitcoin. Others are based on different technologies, or have new features that allow them to do more than transfer value.
• Crypto makes it possible to transfer value online without the need for a middleman like a bank or payment processor, allowing value to transfer globally, near-instantly, 24/7, for low fees.
• Cryptocurrencies are usually not issued or controlled by any government or other central authority. They’re managed by peer-to-peer networks of computers running free, open-source software. Generally, anyone who wants to participate is able to.
• If a bank or government isn’t involved, how is crypto secure? It’s secure because all transactions are vetted by a technology called a blockchain.
• A cryptocurrency blockchain is similar to a bank’s balance sheet or ledger. Each currency has its own blockchain, which is an ongoing, constantly re-verified record of every single transaction ever made using that currency.

• Unlike a bank’s ledger, a crypto blockchain is distributed across participants of the digital currency’s entire network

• No company, country, or third party is in control of it; and anyone can participate. A blockchain is a breakthrough technology only recently made possible through decades of computer science and mathematical innovations.

Why is cryptocurrency the future of finance?

• Cryptocurrencies are the first alternative to the traditional banking system, and have powerful advantages over previous payment methods and traditional classes of assets. Think of them as Money 2.0. -- a new kind of cash that is native to the internet, which gives it the potential to be the fastest, easiest, cheapest, safest, and most universal way to exchange value that the world has ever seen.

• Cryptocurrencies can be used to buy goods or services or held as part of an investment strategy, but they can’t be manipulated by any central authority, simply because there isn’t one. No matter what happens to a government, your cryptocurrency will remain secure.

• Digital currencies provide equality of opportunity, regardless of where you were born or where you live. As long as you have a smartphone or another internet-connected device, you have the same crypto access as everyone else.

• Cryptocurrencies create unique opportunities for expanding people’s economic freedom around the world. Digital currencies’ essential borderlessness facilitates free trade, even in countries with tight government controls over citizens’ finances. In places where inflation is a key problem, cryptocurrencies can provide an alternative to dysfunctional fiat currencies for savings and payments.

• As part of a broader investment strategy, crypto can be approached in a wide variety of ways. One approach is to buy and hold something like bitcoin, which has gone from virtually worthless in 2008 to thousands of dollars a coin today. Another would be a more active strategy, buying and selling cryptocurrencies that experience volatility.

• One option for crypto-curious investors looking to minimize risk is USD Coin, which is pegged 1:1 to the value of the U.S. dollar. It offers the benefits of crypto, including the ability to transfer money internationally quickly and cheaply, with the stability of a traditional currency. Coinbase customers that hold USDC earn rewards, making it an appealing alternative to a traditional savings account.

Why invest in cryptocurrency?

• Online exchanges like Coinbase have made buying and selling cryptocurrencies easy, secure, and rewarding.

• It only takes a few minutes to create a secure account, and you can buy cryptocurrency using your debit card or bank account.

• You can buy as little (or as much) crypto as you want, since you can buy fractional coins. For example, you can buy $25.00 worth of bitcoin.

• Many digital currencies, including USD Coin and Tezos, offer holders rewards just for having them.

• On Coinbase, you can earn 1% APY on— that’s much higher than most traditional savings accounts.

• You can also earn up to 5% APY when you stake Tezos on Coinbase. Learn more about Tezos staking rewards.

• Unlike stocks or bonds, you can easily transfer your cryptocurrency to anyone else or use it to pay for goods and services.

• Millions of people hold bitcoin and other digital currencies as part of their investment portfolios.

How does cryptocurrency work?

• Bitcoin is the first and most well-known, but there are thousands of types of cryptocurrencies. Many, like Litecoin and Bitcoin Cash, share Bitcoin’s core characteristics but explore new ways to process transactions. Others offer a wider range of features. Ethereum, for example, can be used to run applications and create contracts. All four, however, are based on an idea called the blockchain, which is key to understanding how cryptocurrency works.

• At its most basic, a blockchain is a list of transactions that anyone can view and verify. The Bitcoin blockchain, for example, is a record of every time someone sends or receives bitcoin. This list of transactions is fundamental for most cryptocurrencies because it enables secure payments to be made between people who don’t know each other without having to go through a third-party verifier like a bank.

• Blockchain technology is also exciting because it has many uses beyond cryptocurrency. Blockchains are being used to explore medical research, improve the sharing of healthcare records, streamline supply chains, increase privacy on the internet, and so much more.

• The principles behind both bitcoin and the Bitcoin blockchain first appeared online in a white-paper published in late 2007 by a person or group going by the name Satoshi Nakamoto.

• The blockchain ledger is split across all the computers on the network, which are constantly verifying that the blockchain is accurate.This means there is no central vault, entity, or database that can be hacked, stolen, or manipulated.

How many cryptocurrencies are there? 

• According to CoinMarketCap.com there were more than 8,000 different cryptocurrencies with a global market value of about $2.24 trillion as of Dec. 12, 2021. 

• Bitcoin, the first cryptocurrency, was launched in 2009 as an alternative type of decentralized and digital money. Since then, people have also created cryptocurrencies that serve other functions or are designed for specific types of transactions. 

• "Cryptocurrencies can have many different uses," says Parisi. "Some are used in gaming environments to earn rewards in a game, while others facilitate payments. Some are designed for cross-border remittances … some are designed for micro payments."

• For example, stablecoins are a type of cryptocurrency that try to maintain a steady and fixed exchange rate with another asset, such as the US dollar. Governance tokens are another example of a specialized cryptocurrency. They give token holders voting power in a corresponding crypto project.

Are cryptocurrencies secure?

• The blockchain technology behind cryptocurrencies can help ensure that the coins and systems remain secure. "What's never been refuted is the value of blockchain," says Donovan. "The way the ledger system is set up and every transaction is recorded. And the fact that it's immutable."

• However, that doesn't mean you don't need to worry about security. The crypto world is rife with scams. Of course, that's also true of traditional financial systems and currencies. Someone asking you to pay with a gift card or wire transfer is a red flag that you're dealing with a scammer. But several factors could make crypto scams especially worrisome. 

• For example, cryptocurrency transactions can't be reversed. There's also less regulation of cryptocurrencies and platforms than of traditional financial services in the US. Plus, some people may feel pressure to act quickly and send or invest their money because they're worried about missing out on an opportunity. 

• "One way to avoid a scam is to invest in more well-established cryptocurrencies, like Bitcoin or Ethereum," says Parisi. "You still may be subject to scams or fraud in terms of how you hold it, send it, or receive it." But you can have some certainty that the cryptocurrency itself isn't a scam.

How do I buy cryptocurrency?

Cryptocurrency can be purchased through a broker or exchange, such as Coinbase. To purchase cryptocurrency, the individual must open an account, deposit cash, and place a trade order (buy). If an individual is seeking exposure to cryptocurrency, they can also purchase an ETF [exchange traded fund], buy a cryptocurrency focused mutual fund, or own the stock of a company that focuses on cryptocurrency, such as Square.