Thursday, June 20, 2024

A Newcomer’s POV to Cryptocurrency

Howdy! Not sure if that’s the best way to open up but it’s me again, Beren Attoe, coming at you with another newcomer-focused article. Here, I’ll be talking about cryptocurrencies. It’s a field that I’m only beginning to learn. Even with all the notes I’ve collected, it’s a subject that I could dedicate my life to and still not have all the answers.

That’s exciting, but that’s also a little scary. Think of how a child might look up at a skyscraper and go “wow, that’s so tall!” That’s how I feel with cryptocurrencies.

First, though, what are cryptocurrencies?

A cryptocurrency is a digital currency that holds no physical form. One of their defining characteristics is their detachment from central authorities and governments, which allow them to function without interference from higher powers. They’re also nigh-impossible to counterfeit. Some consider them volatile. Some consider them revolutionary.

To really boil it down, it’s data. Data, and protocols, with commercial value.

There’s a whole process to “discovering” cryptocurrency, referred to as mining, but I think we’d be here forever if I covered that as well. It’s an article for another time. It involves blockchain technology, cracking algorithms, and so much processing power that could cause lower-end machines to melt. Consider that topic to be a Part 2 to this article.

We’re covering the history, the initial thoughts, and the most immediate benefits.

Bitcoin, thought to be the first cryptocurrency, was founded in 2009. This makes the field over 10 years old. Since then, it’s gained momentum through spikes of popularity. In early 2012, major online websites and retailers began accepting Bitcoin as a legitimate payment method. New cryptocurrencies emerged soon after. Litecoin. Ethereum. Even something as silly and lovable as Dogecoin. These are only a few, though, as there are countless cryptocurrencies out there in today’s world.

As mentioned above, it’s been 10 years since Satoshi Nakamoto (a pseudonym for a person or group) founded Bitcoin. That might give rise to the thought: “Is it too late to jump into the market?” Some people might tell you that, yes, there’s no point if you didn’t join early. Other people – even banks and organizations – might tell you, though, that the momentum is shifting. I’d support the latter notion. That, since it’s become abundantly clear cryptocurrency isn’t going to go away anytime soon, there’s still so much to develop and improve upon.

There’s a growing desire, in fact, for more people to learn about bitcoin and other cryptocurrencies. I want to see more products that market this field towards newcomers. To me, but not specifically me, if you catch my drift. I’m of the belief that everything – not just finance – should be and can be explained in a few sentences. Maybe just one. If you can’t do that, then you probably can’t explain it and something needs to be done about that.

(That’s my background as a creative writer coming in. Word economy, word economy, word economy!)

And you know why I want more people to learn about cryptocurrency? Because there are clear benefits for people to invest in it, instead of more traditional assets. It’s secure against counterfeiting (as mentioned above), it’s perfect for microlending (exchanging tiny amounts of money), and they are not subject to transaction or banking fees. Not only that, but because a person’s crypto wallet can be accessed through a website or a smartphone app, you don’t need to submit yourself to the jumping-through-hoops process that is setting up a bank account. This makes it accessible to people who might not have access to traditional payment methods, such debit and credit cards.

One last point I want to touch on, though, are the warnings associated with cryptocurrencies. It can be a volatile market. One day, you might find Dogecoin to be worth £0.40. Another day, it could sink down to £0.10. If you invested in Dogecoin, that could potentially be a massive loss. You’re always going to have some element of risk associated with it. And there are going to be times where the market just… does something silly. When a particular cryptocurrency has a change in value, or change in structure, that no one expects.

But, wow, there’s so much more I want to talk about. How does mining work? What are the differences between this cryptocurrency or that cryptocurrency? Why was it made?

We’re definitely going to revisit this topic, so I think this is a good point to finish things off.

For now.

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