Cryptocurrency is a digital way to send, receive, and store money without third parties like banks, credit cards or companies (Paypal, Venmo, etc). Basically removing all middlemen.
Banking and credit card critics say:
- A slow, expensive, broken financial system
- High fees due to the cost of employees, lawyers, buildings, etc.
- Limited access to money
It started in 2008, an anonymous person referred to as “Satoshi Nakamoto” invented the first cryptocurrency, Bitcoin. To this day, nobody knows his true identity.
What’s the big deal?
It solves the Double Spend Problem: Digital money is easy to counterfeit, whereas banks keep track of everyone’s accounts to avoid it. Bitcoin makes all accounts and transactions public without revealing personal details (name, address, etc). Since account balances are public, scammers can’t spend Bitcoin twice.
Cryptocurrency advocates say:
- Run by the user community, not centralized entities (banks and government).
- Money transfers are cheaper, faster, and easier.
- Users control their own money in a peer-to-peer system (P2P).
- Can apply to multiple industries to remove middlemen (music, apps, cloud storage, etc):
- Ethereum – apps (no need for Apple and Google app store)
- Ripple – company-to-company money transfers (no need for Bank of America)
- Litecoin – Based on Bitcoin, processes more payments in a shorter time
- Dash – Cryptocurrency that can be used as digital money more conveniently
- NEO – Similar to Ethereum, the first cryptocurrency launched in China
- Monero – Private, anonymous, untraceable, digital cash.
- IOTA – Cryptocurrency used to run internet-connected devices (smartphone, watch, TV, cars, etc)
Image source: Blockgeeks