When explaining cryptocurrency to people, they usually ask the same questions.
- “Is it real money though?”
- “Is Bitcoin the only one?”
To the first question, I almost always answer “but what is ‘real’ money?”
Usually, to those asking the question, it means ‘tangible’, something they can feel with their trusting hands, (like a piece of paper will provide them with reassurance and credibility.)
When answering the second question, I take a deep breath and say “No, Bitcoin is the original. It is one of the top cryptocurrencies in the world. Just like the USD, GBP, Euro. Bitcoin, Ethereum, Litecoin and Bitcoin Cash are **all very real, **as are the 2000+ other cryptocurrencies in the space.
It really does depend on what you feel most comfortable with having in life–money you can touch, or money that you hold securely on a device that isn’t controlled by any one entity and entirely by yourself.
Both currencies and cryptocurrencies will buy tangible goods–and to most, in our opinion, is all that’s needed, to ‘feel ok’.
Then, there is always one who asks ‘but what if the electricity goes out worldwide?’
To which, I will always answer “then you will have many more problems than currency, dear.”
What is crypto and what is currency?
Currency = “limited entries in a database no one can change without fulfilling specific conditions.”
Cryptocurrency =“limited entries in a database no one can change without fulfilling specific conditions.”
Yep, they’re the same thing.
Peer to peer electronic cash or an asset that you send from one person to another without any middleman, with usually low fees and almost instantly.
Cryptocurrency ‘coins’ hold value based on the amount available vs demand and transaction volume. For example, if you had 20 stainless steel straws ( because who doesn’t? ) and only 5 people wanted them, then the price would be lower compared to if 100 people wanted them. It would push the price right up. That’s why when every single person wanted their hands on Bitcoin back in 2017, the price skyrocketed, demand vs supply–simple.
Crypto is partially untraceable, usernames are swapped for public addresses. But, they can be traced– especially if one user is using the same address multiple times. That’s when privacy coins step up.
Privacy coins like Monero and **very recently, Bitcoin Cash **use multiple technologies to enable the sender, the receiver, the authorizer and the amount sent/received to remain completely private. This way **no one can track **your movements, helping to keep you anonymous.
Stablecoins like USDC, are coins that don’t fluctuate in price. They’re pegged against the USD. Which means, they’re still a cryptocurrency–but they almost mirror the price of the USD. They’re a good option for merchants accepting crypto, who might want to convert their revenue to something less likely to fluctuate massively in price.
Ok, now tokens are slightly different. A cryptocurrency can have its own tokens. For example, think of the cryptocurrency as the ‘main company’. That company wants to incentivize people to stay within their ecosystem and make money. So, they offer tokens. These tokens can be used in exchange for other tokens ( trading ) they can also be used for cool things.
For example: Very soon, in our store, we will be distributing tokens called PW. We will give them to all our customers. If the customer accumulates 100 PW tokens ( by being a regular shopper ), they may receive a free product. This adds an incentive for the consumer to shop–a bit like loyalty and cash back schemes.
Referral schemes. We’re talking the, ‘send this link to 5 friends and gain $10 to spend in store.’ referral schemes. But instead, swap out $10 in the sentence for X amount of tokens instead. That’s as basic as it can be. ( And if it’s not, please let us know!)
The above is really all you need to know to have a basic understanding of the most commonly used cryptocurrencies, and what they mean for you as a user.
For more discussions around the different types of cryptocurrencies, please join our Telegram group.
To spend your crypto, head to our store.