What is cryptocurrency?

Cracking the Code

I remember watching tens of videos and reading a myriad of articles on cryptocurrency, trying to figure out how it worked. Instead, I was faced with a load of jargon and terms I couldn’t understand. After such a long time, the information I found has chained together, and I can finally understand how a cryptocurrency works, for the most part. But, what even is a cryptocurrency? 

What is Cryptocurrency?

Cryptocurrency is a digital kind of currency that uses cryptography for transactions. Cryptography is a way or process of coding so that messages are hidden from everyone except the person it was intended for. It is entirely electronic and is independent of any bank or government. It operates on decentralized networks, such as a blockchain, but what even is that?

How does Cryptocurrency Work?

Blockchains use distributed databases to record transactions. Every transaction, included with all the information about the said transaction, is located in a “block”. These blocks are all linked together by “chains”, which reference the transaction before them. When computers on these networks verify these transactions, they create new cryptocurrency coins.

Why was it Invented?

Although there are some theories as to what kind of cryptocurrency was invented first, the first one to become popular was Bitcoin, which was made by Satoshi Nakamoto, a pseudonym for a group of programmers. The goal was to create a currency that wasn’t run by a government and that transactions could be made without a middleman, like a bank. When it was first introduced in 2009, one Bitcoin was not worth anything. In June of 2011, it reached $29.60, and as of September of 2024, one Bitcoin is worth $58,364.00. 

An Uncertain Future in an Uncertain Economy

Cryptocurrencies have impacted the economy we know of today. We can complete secure and efficient transactions without the use of a bank, and it has given businesses and entrepreneurs numerous opportunities. We do not know for sure what it will be worth in the future if they’re worth anything at all, but that keeps us guessing, and it makes us wonder if maybe we should put some money into this fully virtual market.