A guide that will explain crypto for dummies

Crypto industry never backs from surprising us with new innovative projects since establishment. Since the first prominent digital currency was established in 2009, the industry has been a buzzword. Although it’s been more than a decade now, still many are unaware of what the sector conveys.

It is significant that the world should understand how digital currencies are blending cryptography and currency. The financial technology solution is allowing the world to move cryptos among parties securely using encryption and decryption. Besides, serving as an alternative to financial and monetary infrastructure, the ecosystem is also changing how the internet itself works.

Why is the crypto world skyrocketing?

The world of cryptocurrencies consists of technologists, nonprofits and for profit organizations, and investors who are playing distinct roles. The market has grown from zero to trillions of dollars. The first cryptocurrency is Bitcoin and now there are thousands of projects available.

A newbie in the market needs to know that cryptocurrency is not always a cryptocurrency, it may not necessarily pertain as a virtual currency, as the assets in the ecosystem could be different and have different utilities. There can be only one word in the market which is “cryptocurrency” but it varies to different contexts.

But one thing is common that each of the crypto projects are conceived to address a real-world problem.

The creation of the first cryptocurrency was revolutionary as it leveraged existing technologies that were never used before together previously. The cryptocurrency alone introduced Peer-to-Peer network, blockchain technology, cryptographic hashing functions, and the Proof-of-Work consensus mechanism. Despite its elegance no one would have predicted that it will grow this big today.

Not every projects in the cryptosphere is exponential

With potential to disrupt our monetary system, Bitcoin also brought numerous opportunities. As the code base of BTC was open-source, it helped many developers to learn and make their own blockchains.

Following the demand for the cheat sheet, Ethereum was introduced and it made it easy to get cryptocurrency projects off the ground through ICOs.

However, as things got more convenient, it began to be observed that not all the projects are paradigm shifters. The convenience helped illicit players to get quick access to capital and the number of ponzi schemes began to rise. Meanwhile, some technologists introduced silly crypto projects in the market because they could.

Following the fact, if we look at what is happening today, we can compare the scenario with the dot-com bubble. Back in 2000, when the dot-com hype took pace almost every tech stock was hot. Notably, only the once with true potentiality were able to survive. And today we can see something similar in the crypto ecosystem as well.

Some of the projects are going to share the same fate as what many tech stocks witnessed after the do-com bubble burst. But the projects whose network will grow to become one of the biggest in the ecosystem will surely stay for a longer time frame.

Medium of Exchange & Units of Account

Crypto assets are like government issued fiat, as that enables us to transact for goods and services. Using these assets any one can pay in exchange for something without the need of any centralized authority.

For instance, Bitcoin which is a form of electronic cash exchangeable directly among peers. However, unlike every fiat, BTC is beyond the control of any government or similar centralized authority. Indeed, Bitcoin knows no boundaries, as its censorship resistance makes it convenient to send to or to receive from any party located in any jurisdiction. And the best part is that our transactions on the Bitcoin network is completely transparent but no one would ever be able to know our identity, so anyone can use the digital money without any discrimination.

Besides, as crypto inseparable from blockchain, the technology in its core there is no questioning regarding the utility of crypto as a unit of account. Digital assets are divisible, countable, and fungible.

Cryptocurrencies could be used for valuing goods and services, calculations, and recording financial transactions like payments and debts.

Digital assets represents different ideals

Many investors in the crypto market are yet unable to determine the difference between value and price. Indeed, today many projects’ valuation with little or no practical value is soaring. Cryptocurrencies do represent different ideals, as similar to brands.

Bitcoiners in the industry believe that the top project is the best hedge against inflation. Moreover, the enthusiasts do view the asset as superior to the USD as a reserve asset.

On the other hand, the supporters of Ethereum believe that the cryptocurrency project is made for individuals who support the decentralization of the internet and open-source collaborations.

When looking in the meme-coin community, the industry attracts the same breed of the rebels that have gotten behind the GameStop. Indeed, assets seem more newsworthy than others.

However, we can say that the cryptocurrency ecosystem is a bewildering place to navigate. Today, it is truly difficult to comprehend how each one is working at the technical level. The innovative crypto industry for dummies is still in the nascent stage, and more individuals need to understand what the ecosystem is trying to convey and how it would help enhance our day-to-day lives. It is time to step in the ecosystem and continue on this path.