What is Cryptocurrency? [Bitcoin, Ethereum, Altcoins 2021]

Bucky Wucky Finance > Cryptocurrency > What is Cryptocurrency? [Bitcoin, Ethereum, Altcoins 2021]
What Is Cryptocurrency?

Bucky Wucky does have sponsors, and we may work with companies to provide you with the best content, information, and data on business and personal finance. Some links on our site may be affiliate links. While our sponsors may pay us, we only work with companies that align with Bucky Wucky’s values.

What Is Cryptocurrency?

What is Cryptocurrency?

What is cryptocurrency? Cryptocurrency is an emerging asset class that continues to garner interest and initiate debates on current monetary policy that has continued to flourish throughout the years. 

Cryptocurrency is a familiar term to many, but an asset that has yet to see mainstream adoption. Still somewhat of a vague term for most, the cryptocurrency market has experienced massive growth in market cap, use case, and awareness since its inception back in 2009. 

Bitcoin

Bitcoin remains the most notorious cryptocurrency, was the first to come to fruition, and stands at number 1 in terms of market cap. 

As the best performing asset of the decade, Bitcoin was created as an initial response to the global financial crisis of 2008, providing an alternative safe-haven for investors during moments of crisis. 

As corrupt policies and quantitative easing bailed out large corporations at the expense of the people, Bitcoin would incentivize individuals to save their money throughout time acting as a deflationary asset. 

Sharing many of the qualities that make gold a hard asset, Bitcoin also adds the benefits of portability, divisibility, and true ownership, something traditional precious metals lack. 

Many anticipate Bitcoin will represent a new generation of wealth as FIAT currency sees unprecedented printing, the possibility of hyperinflation and world powers start to question the US dollar’s validity as the world reserve currency.

However, while Bitcoin initialized the creation of cryptocurrency, a multitude of different cryptocurrencies also started to form with each offering their own unique use case and benefits. Some such as Zcash and Monero prioritize privatization of user information, while others such as Ethereum incentivize developers to build applications on their platforms. 

While there is a multitude of projects that have promising ideas and technology, it should be noted that because this industry is still so new, many projects called “Altcoins” have much to prove before they can garner mainstream attention and compete against Bitcoin. 

Nonetheless, because the cryptocurrency market is filled with an abundance of projects, it brings a large amount of competition, pushing each other to mature and ensuring those on top truly deserve to be there.

Decentralized

While cryptocurrencies may have slight differences that affect their transaction speeds, security policies, privacy, and associated fees, they all share two major things in common. The first is they all use blockchain technology to process, verify, and record transactions. The second is that they are decentralized. 

Decentralization a key factor in making cryptocurrency a unique investment vehicle since it eliminates any single point of failure. A great example is looking at the Bitcoin network. There is no single owner or company that governments can pinpoint to disrupt the Bitcoin network because it is comprised of thousands of nodes continuously mining and confirming transactions. 

Centralized

However, some cryptocurrencies attempt to operate with a centralized entity, and many debate whether they can truly be called cryptocurrencies if they aren’t decentralized.

Facebook’s Libra, the Chinese digital Yuan, and JPM coin are all examples of cryptocurrencies with a single point of failure. By removing the decentralized aspect of cryptocurrency, they are not only circumventing one of the most advantageous aspects of the asset class, but they aren’t doing anything innovative either. 

Many decentralized cryptocurrencies already solve a lot of the issues these centralized coins are trying to fix which leads many to believe that they were only incepted to push a power-hungry agenda, collect more user data, and take advantage of the consumer. For this reason, Libra has seen many difficulties getting their project through congress, being shut down multiple times due to Facebook’s already questionable history with data integrity. 

When one compares decentralized cryptocurrencies to centralized cryptocurrencies, in the end, these centralized cryptocurrencies are only advantageous to the issuer. By instituting massive control over the supply, liquidity, and fees, the main change for the user is simply a decrease in privacy. 

The simplest argument to be made for why centralized cryptocurrencies shouldn’t be considered true cryptocurrencies is to look at why cryptocurrencies were created in the first place. They were initially created for the people to opt-out of a corrupt and irresponsible monetary policy system, the one in which fractional reserve banking and corporations continue to take advantage of consumers through bailouts that leave common people empty-handed. 

Cryptocurrency in its inherent nature is a decentralized asset class that should always prioritize the end-user, act as a store of wealth, and allows for transparent processes that put the user in control. Anything other than this is simply a centralized FIAT currency that now has access to new technology. 

Enjoy our article: What is cryptocurrency?

You may also be interested in What Is Bitcoin Mining?

Find Us On Social Media

Own A Home And Need Cash?

haus calculator

Switch & Save On Your Car Insurance

Newsletter

Join our mailing list!

Apply For A Clearbanc Business Loan