Understanding Cryptocurrency: What’s the Hype About?

date_range January 27, 2022
person Zoe Perl
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When we say cryptocurrency, you might associate it with multiple things: confusion, money you can’t touch, getting rich fast, mining? Understanding crypto is not an easy task, being that it still is the new kid on the finance block.

With crypto splashing all the headlines, you might ask yourself why everyone is talking about dogs and bits? Why are there memes involved? Or why is your friend’s 20-something niece driving a Ferrari? 

Answers to these questions and more are hidden behind months of reading, researching, and keeping up with crypto trends. It might not be easy, but understanding crypto, like everything else, begins with the basics. 

This is where Magic Square comes into play. The article below describes the foundation of understanding cryptocurrency. After reading it, you’ll be well-prepared for the future of finance, and you’ll sound smart at parties. Stay tuned!

If cryptocurrency is the financial future knocking at our door, how can we trust something we cannot see? Can money be just zeros and ones?

cryptocurrencies

What is Cryptocurrency? – A Crypto Synopsys 

In simple terms, cryptocurrency is just like regular currency, but it’s digital. Crypto comes in many different forms, uses, and intentions. However, the easiest way to define this new age wonder is as a form of stored value or a digital asset.

One of the main perks of digital money is that no regulatory entity controls the market, like governments, central banks, and other financial institutions. In crypto, nothing is standing between you and your assets.

Each and every creation and transaction is kept on a digital record, called the blockchain. Think of it as a digital transaction register. Its open nature is something that guarantees transparency but also – safety. Once the information is in this digital book, it cannot be tampered with. 

Additionally, when talking about safety, it is far less possible that someone will steal your digital money (if you know what you are doing) than actual money. The fact that you can’t see it, touch it, or keep it in your pocket doesn’t necessarily mean it’s bad. 

Finally, its accessibility is unmatched, given that you can use it anywhere in the world. The only thing you need is an internet connection, a smartphone or computer, and a crypto wallet.

Cryptocurrency allows you to buy, sell, lend, or borrow money anonymously, without a bank account or a credit score.

Crypto Versatility

Some of these digital coins are for transferring value, measured in a traditional currency, such as dollars, euros, etc. It is faster and cheaper than using conventional payment methods (credit cards, for example). Checks and wire transfers are a thing of the past. 

On the other hand, other cryptos are explicitly a form of payment, accepted in software or exchanges. Video games are one example. When we look back, we can conclude that this made crypto extremely popular on the dark web over the past couple of years. You could use crypto to buy drugs and other illegal items, leaving no traces whatsoever. 

However, you shouldn’t write off crypto as a dangerous payment option, as it is not just for illegal exchanges. The reality is that its volatile nature actually made it useless on the black market.

How to Jump Into the Crypto Space

Undoubtedly, you’ve heard of Bitcoin and our favorite meme-inspired Dogecoin. And yes, they’ve made certain people rich overnight. This instant wealth can be explained with the two coins becoming viral in a short period of time; from being worth a couple of pennies to a couple of thousand dollars. But, how can you get there?

The easiest way to start your crypto journey off right is with a crypto exchange. There are several popular ones you can choose from, and use on your smartphone. As easy as that. Creating an account makes it possible for you to sell, purchase, and store your digital assets. Phone or computer, it doesn’t matter.

Simply download the app, enter your personal info, and connect to an account, after which you can trade instantly. Be warned, though, that addiction is possible, along with market volatility anxiety. Tell-tale symptoms include checking your phone and CoinMarketCap every 2-5 minutes over the span of two weeks or more. 

Conclusion – What’s the Hype About and Is It Worth It?

To summarize, here we have merely scratched the surface of what cryptocurrencies are and how they work.  This article is a great starting point for more advanced and in-depth information about the curious world of cryptocurrency.

Once you establish a crypto foundation, the road to wealth might just be right around the corner. Magic Square has your back. Read more about understanding crypto on our blog, get in touch with our crypto community, and find out how Magic Square is making crypto all the better!