We’re used to hearing the word ‘crypto’ from contemporary novels and movies, where super secret codes are quietly discussed among stylish spies and the furrowed brows at Langley or MI6. In essence, crypto, short for encryption is computer-based data that has a secure software lock on it to prevent unauthorized access or changes to the code.
Currency is, well, cash. It’s a faith-based ‘thing’ that you exchange something for. Currency has similar attributes to money, though money, in its truest form is a store of value—it holds a value over centuries, whereas currency does not.
Crypto Currency, then, is secure Digital Cash that can be used in transactions for services or stuff. It can be used all over the world; it's private and requires no bank; it can be divided into smaller amounts; and, because it is not government-issued, is free of manipulation and interference by any central authority.
The first crypto currency, Bitcoin, was developed and then released in 2009 by the mysterious Satoshi Nakamoto, a pseudonym for a person or a small group. Due to its novelty, its limited future supply of 21 million Bitcoin, and cheap transaction charges (not to mention a poke in the eye of banking cartels), interest in the new currency slowly gained a following among the tech community.
One of the first and best-known transactions involving Bitcoin took place on May 22, 2010, when two Papa John’s pizzas were purchased by a programmer for 10,000 Bitcoins. Based on the pizzas’ $25 pricetag, a Bitcoin at the time was worth a quarter of a penny. (Today, with the price of Bitcoin hovering around $4,000, those two Papa John’s pizzas purchased several years ago are now worth around $40 million!) By 2012, over 1,000 merchants were accepting payment in Bitcoin, and today, interest has exploded to include many major corporations and governments worldwide.
As acceptance of the idea of crypto currency grew, alternative currencies, many using different security measures and purposes began appearing. Namecoin was the first in 2011, followed by Litecoin that same year. Since then, over 1,000 ‘altcoins’ have been issued, with a few, such as Ethereum, BitConnect and Monero being more successful than most. Sometimes, these alternative coins are issued for nothing more than speculation. Buying them when they’re first issued and playing the market has become a popular and profitable pastime for many, but inevitably can soil the reputation of Bitcoin and other legitimate crypto currencies should the markets make a significant downturn.
When you purchase crypto currencies, they must be stored in a digital 'wallet' from which transactions can be made. These can take form as a wallet on an online exchange, one on your computer, or on a hardware wallet totally independent of the Internet. Each provides a level of safety and convenience, as well as a level of risk.
Is crypto currency here to stay? The verdict on its long-term use is still out for many, while others, including Microsoft’s Bill Gates and Virgin’s Richard Branson see Bitcoin as a viable method of rapid and stable transactions and potential growth in value for years to come.
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