Understanding the Basics: Cryptocurrency

What is Cryptocurrency

Crypto is a decentralized digital currency that can be bought, sold, and traded just like stocks. Unlike stocks, crypto is decentralized. This means that instead of being traded on regulated exchanges—like the NASDAQ and NYSE—crypto exchanges are traded on deregulated platforms. Think about regulation like a middleman. When you buy a stock, an order is put in for your purchase. Then, a middleman will manage your trade and put the order through. On the other hand, most crypto trades happen directly between traders.

How is Decentralized Trading Possible?

Decentralized trading is possible with a little thing called a blockchain. A blockchain is a place where every crypto transaction is recorded, and everyone can see every transaction! So, instead of one centralized authority overseeing trades, everybody on the blockchain oversees and can verify trades.

What is the Purpose of Cryptocurrency?

Crypto has two main purposes: buying goods and services, and investing. First, some people/companies have started to accept crypto as a payment method. For example, imagine going to a gas station and instead of paying for a bag of chips with cash or a credit card, you pay with Bitcoin. Second, you can invest into centralized crypto on exchanges like Coinbase and Binance.

Popular Cryptocurrencies You Should Know

There are over 20,000 cryptocurrencies, but Bitcoin is by far the most popular. Created in 2008, Bitcoin has grown to over $100,000 dollars. Aside from Bitcoin, there are other popular cryptocurrencies like Ethereum and Solana. Each of these cryptocurrencies have their separate communities and uses which we’ll get into in later lessons.

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