What the hell is Cryptocurrency?

When cryptocurrency is talked about anywhere, many times people only think of the main form of virtual currency being Bitcoin. However, that is not the case, the total number of different coins is about 1450. A nice list of all coin, along with their current prices can be found on my favorite website to use CoinMarketCap. Since this will be the first post on this blog I will try to sum up what cryptocurrency is by explaining the forefather of crypto, Bitcoin.

Bitcoin can best be summed up by describing it as a virtual commodity. That being said, you can trade any thing with this "imaginary" money for actual physical objects. Many websites and businesses have a checkout option where Bitcoin can be used. Amazon was one of the first to include this option. In some extreme cases, people have even listed cars and houses for sale and would only accept cryptocurrency.

Many cryptocurrencies are minable, being that you can create Bitcoin and put that into your own wallet. Bitcoin is minable because people use their own hardware, like GPUs and CPUs, to confirm if a Bitcoin transaction is valid. For their work, they are rewarded with a certain amount of a Bitcoin. When Bitcoin first went open source, is was trading for about $0.08 back in 2011. A year later it was only about $1.00, still a very cheap price.

Currently Bitcoin is trading at around $11,000.00. This is actually pretty low as the new year brought a huge drop in price. Before the dip, it reached as high as $18,000.00. For example, let say in 2011 you decided to invest $100.00 in Bitcoin when it was trading around a simple dollar, today that investment would be worth over $1 million. This is where people go crazy over virtual currency. Alternative coins where born, short after the success of Bitcoin, with people trying to make money. Business Insider did a short article describing what the differences are between them.

Chart of BTC in the past year

Cryptocurrency is thought to be a bubble. Individuals believe that one day it will burst and the value of it will drop and leave people stunned. This is why they choose not to invest. I would agree with people in the sense that everything is a bubble if you think about it. Stocks also experience bubbles, NASDAQ had a burst in 2000, and an even bigger one in 2008. Bitcoin has seen many bubbles already and is currently experiencing one right now. Similar to stocks, after every burst, they both came back even stronger then before.

What makes Bitcoin, and other cryptocurrency, so popular is that they are decentralized. This means that no government has control of the currency, also that it is not backed by any bank. Another factor that makes it stands out, is that it is untraceable. This is where all the speculations from it come from too. Many people believe that since it was once used as the form of currency on the black market, or that people are using it to hide money, they think it is illegal. I'm not here to change your opinion on what you believe, just to inform you of news.

Next time, I plan to inform my readers of an altcoin that has promising features and how it differs from Bitcoin. Never will I urge people to invest in any of the coin I write about. If you are looking to invest in to virtual currency, I will leave you with this one tip. Do not put money in, if you cannot afford to lose that money.