You’ve no doubt heard the term “cryptocurrency” thrown around. If you’re like most people then you really have no idea what it means or what it’s all about. Even the name makes you wonder what it actually is. You can’t just call something “crypto” and expect everyone else to get it. Like most things to do with technology and the internet, the names things are called are never really meant to offer meaningful definitions to the world at large. Just to break it down a little bit, the name lets you know that we’re talking about currency that uses cryptography rather than a centralized authority. Once again, what does that mean?
Peer to Peer Transactions
It all comes down to the way that transactions are made with cryptocurrency. The money in your bank is part of a centralized system overseen by the government. Banks keep track of it and every dollar they store is insured through the FDIC. That’s not the case with crypto.
Cryptocurrency exists in the digital world and nowhere else. If you remember file sharing through programs like Napster, it’s much the same thing. The money is stored on computers all around the world. When you buy or sell something, the currency moves through peer to peer computers rather than the government overseen banking system.
So, who’s keeping track of all these transactions around the world? Every person that’s using crypto right now is doing it. It’s all recorded on a public ledge called blockchain. This blockchain is distributed through computers and servers across the globe so no one person, or entity, has control over it. That means that the people who use crypto are also in charge of keeping track of it and there lots of pros and cons to that sort of system.
No owner of cryptocurrency owns anything tangible. What you have is a digital key and nothing more. That means you need a safe place to store it where it won’t get hacked or taken from you. That’s where wallets come in. There are two different types of crypto wallets: hot wallets and cold wallets.
Hot wallet storage: Hot wallets refer to crypto storage that uses online software to protect the private keys to your assets.
Cold wallet storage: Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store your private keys.
What can you Buy with Cryptocurrency?
So, what can you actually buy with cryptocurrency? Well, it turns out that you can actually buy a lot! There are some big tech companies that accept crypto on their websites. Just to name a few of them, you get AT&T, Microsoft, Shopify, Home Depot, and Rakuten. You can also use it to buy from certain luxury car brands and many subscription based web sites accept it as payment. In short, you can use a digital, non-centralized currency to buy tangible assets in the real world and that goes a long way towards legitimizing it!