What is Cryptocurrency aka Crypto?

Cryptocurrency, also known as digital or virtual currency, is a form of currency that is created and exchanged using advanced computer algorithms and encryption techniques. Unlike traditional fiat currency, which is issued and controlled by central banks and governments, cryptocurrency operates independently of any central authority.

The first and most well-known cryptocurrency is Bitcoin, which was created in 2009 by an individual or group of individuals using the pseudonym Satoshi Nakamoto. Since then, thousands of other cryptocurrencies have been created, each with its own unique features and uses.

One of the main benefits of cryptocurrency is that it allows for peer-to-peer transactions without the need for a middleman, such as a bank or credit card company. This decentralization offers a level of security and privacy that traditional financial systems cannot match. Transactions are recorded on a public ledger called the blockchain, which allows for transparency and immutability.

One of the most popular use cases for cryptocurrency is as a store of value, similar to gold. Bitcoin, for example, has been compared to digital gold due to its limited supply and decentralized nature. Other cryptocurrencies, like Ethereum, have more functional uses and are often used to power decentralized applications (dApps) and smart contracts.

While cryptocurrency has the potential to revolutionize the financial industry, it is not without its challenges. One major issue is the lack of regulation and oversight, which can lead to fraud and scams. Additionally, the volatility of the market can make it a risky investment for those who are not well-versed in the technology.

Cryptocurrency vs Tokens

Tokens and cryptocurrency are related but distinct concepts in the digital asset world.

Cryptocurrency refers to a digital asset that uses cryptography to secure transactions and control the creation of new units. Bitcoin is an example of a cryptocurrency. Cryptocurrency operates on a decentralized network and typically aims to replace traditional fiat currencies such as the US dollar or euro.

Tokens, on the other hand, are a type of digital asset that can represent a wide range of assets, such as stocks, commodities, or even virtual real estate. Tokens can be built on top of existing blockchain networks like Ethereum and can be used for various purposes, such as fundraising through initial coin offerings (ICOs) or as a means of exchange within decentralized applications (dApps).

In summary, cryptocurrency is a specific type of token that operates as a form of digital currency on a decentralized network, while tokens can represent a wide range of assets and have a variety of uses beyond being used as a currency.

Where to Buy your First Crypto

To participate in economic activity on marketplaces, you will need to acquire and use cryptocurrency. The following centralized exchanges have a reputation for being reliable for customers worldwide:

Coinbase Exchange
Kraken Exchange

Set up your Metamask Crypto Wallet

MetaMask is a digital wallet that helps you store and use cryptocurrency like Ethereum. It’s like a digital bank account for your crypto. It’s a browser extension that you can add to your Chrome, Firefox, Brave, and Edge browser, so that you can use it easily and securely. You can use MetaMask to send and receive crypto, and it also helps you keep your crypto safe with a backup feature.

FAQ Metamask

  • Why do I need a Metamask Wallet after joining an Exchange like Kraken or Coinbase?
    Self-custody is a fundamental aspect of web3. It implies that to truly own your cryptocurrency, you must store it in a wallet that you have direct control over, rather than relying on a third-party exchange. When setting up your Metamask wallet, you will receive a seed phrase (or private key) that gives you access to your funds. If you store your crypto on an exchange, the exchange holds the keys and has control over your funds. In the event of any problems, your funds may be at risk, as you do not have full ownership of them.