What is Cryptocurrency?

First Published: 25th of April, 2021 by Patrick Carpen.

Many people have been asking me recently, “what is cryptocurrency?” With the growing trend of digital revolution, it’s a question that just about everyone should be asking right now.

Cryptocurrency is a controversial form of digital money. You can’t see it because it doesn’t exist physically. You can keep your cryptocurrency in “digital wallets” and you can spend it by purchasing from websites and companies which accept cryptocurrency payments. You can even exchange your cryptocurrency in the offline world for a house, vehicle, or just about anything – as long as the seller is willing to exchange it for that form of money.

We must remember that money only has value because people collectively agree that it does. The US dollar, for example, costs the same amount, or less, to produce than the Guyana dollar, but the US dollar, at the time of writing this article, is worth over 200 times the value of the Guyana dollar. Currency that is regulated by government and central banks is referred to as Fiat Currency. A wide range of algorithms determine the value of Fiat Money such as Gross Domestic Product, Gold Reserves etc.

On the other hand, cryptocurrency, in most cases, is not regulated by government or central banks. That is, unless governments and central banks decide to start creating cryptocurrencies. Nothing is stopping them from doing so, and we are hearing of plans by them to do so. However, the most popular cryptocurrencies in circulation today: Litecoin, Ethereum, Bitcoin, etc, are not regulated by Central Banks or government. Their value simple increase as popularity and demand for them increase. These digital currencies have an agreed upon value which is shared by everyone who invests in them.

Recently, Billionaire entrepreneur, Elon Musk, invested in 1.5 billion US dollars of Bitcoin. This caused the value of the currency to spike due to both increased demand and popularity. In 2010, one Bitcoin was worth just 10 US cents. Today, it is worth over 50,000 USD, and some experts are predicting that by 2030, one bitcoin will be worth over 500,000 USD.

Before we get too excited, let’s bear in mind that many digital currencies have come and gone. Do you remember Egold? If not, who can blame you? It was a form of digital money that was allegedly backed by gold, but it vanished into thin air in just a few years. Bitcoin seems to have stood the test of time, and have attracted the glut of quite a few billionaire investors. On the other hand, government and central banks are planning to create rival cryptocurrencies. With all that being said, will you risk investing in Bitcoin? If so, Paxful is a great place to purchase your few “handfuls” of Bitcoin.