The world is abuzz with talk of Bitcoin and other cryptocurrencies and cryptoassets. Not long ago these revolutionary means of transacting were considered a fringe idea that was going to die a natural death or evolve into some niche part of a more broad product schema. Fast-forward to the present day, however, and you'll see that the cryptocurrency and cryptoasset industry has snowballed and has a market cap (the total value in USD of all material cryptocurrencies and crypto assets) that rivals the largest firms in the US (with little sign of things slowing down).
So, what is this new thing called cryptocurrency and what is all the commotion in the financial news related to it about?
What is a cryptocurrency or a cryptoasset?
A cryptocurrency or cryptoasset (these terms can generally be used interchangeably) in general terms can be defined as any member of the new blockchain-based platforms that are made specifically to enable people to make peer-to-peer payments in fast, highly secure, and private ways that requires no recourse to banks, payment providers, or third-party clearing firms. A cryptocurrency is generally a stateless borderless digital currency, the first example of which came into existence in 2009 with the creation of Bitcoin by Satoshi Nakamoto. The cryptoasset industry has since grown exponentially and presently has over 1000 distinct currencies - many of these are scams and useless gimmicks while others are potentially very useful and add capabilities beyond what Bitcoin originally possessed.
Cryptocurrency vs. Fiat Money
The following are a few key aspects of cryptocurrencies and cryptoassets that distinguish them from traditional fiat money (eg. USD, Euro, Yen, Yuan, etc.):
How do I store cryptocurrency?
Being a totally decentralized and boundary-less currency, cryptocurrencies don’t need the present banking infrastructure to be kept safe by their owner. They are stored in encrypted software known as “wallets”, which carry unique codified address with which the user sends and receives them. Additionally, cryptocurrencies and cryptoassets can be stored with third parties where the third party stores the key cryptographic information (eg. your private keys) that will allow access to your cryptocurrency or crypto assets.
Such third party services include Kraken, Poloniex, Coinbase, and Xapo. There is an inherent risk present when using third-party firms for cryptocurrency and crypto asset storage - you are trusting them with the proper maintenance of very key and unique information.
How can I acquire cryptocurrency?
There are two main ways in which to acquire cryptocurrencies or cryptoassets. The first is by following the technical process of creating them (which is generally known as mining), where computers are coupled with specialized hardware to solve massive mathematical puzzles with the chance earning a reward which is the cryptocurrency. The second method is by simply going the route of using your fiat money to buy the cryptocurrency of your choice from the nearest reputable exchange you can find (eg. those third-party firms referenced above).
Prices of cryptocurrencies and cryptoassets from one cryptoasset to another as each digital currency has its own distinct features and peculiar purpose it serves - these unique features and/or purposes influence demand and the addressable market, which in turn influences price. Currently, cryptocurrencies and cryptoassets have proven to be very volatile when compared to traditional financial instruments such as stocks, bonds, real estate, and commodities - this volatility makes it riskier when purchasing cryptocurrencies and cryptoassets because it is hard to know whether the price of a cryptoasset will move against you soon after purchase.
And now, given the rise of cyrptocurrencies and crypto assets to quasi-mainstream financial assets, we're dedicated to providing quality, relevant, and interesting material on cryptocurrencies and cryptoassets. Articles on Bitcoin, Ethereum, Ripple, Cardano, and many more cryptocurrencies and cryptoassets can be found on Pennies and Pounds - all that in addition to a plethora of information on what cryptoassets are, how the entire crypto industry came to be, blockchain/immutable ledger technology, mining, proof of work, proof of stake, and how to prudently invest in crypto if you are so inclined (based on your risk tolerance and ability to withstand the volatility that will come with a crypto portfolio).