“If you like gold, there are many
reasons you should like bitcoin.”
Coinstash in the media
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When first stumbling upon the word ‘cryptocurrency’, nearly all of us have wondered what it really is. So what is cryptocurrency? Indeed, the word is very novel to the layman’s eye. However, once you break it down into ‘crypto’ and ‘currency’, it starts to make more sense all of a sudden!
Cryptocurrency is a compound word, that is, it consists of two words. The first word ‘crypto’ refers to cryptography. Cryptography is a technique by which, generally speaking, information get encrypted. This information can only be unencrypted by the designed audience, typically the person who holds the ‘key’ to the encryption. ‘Currency’, on the other hand, is easier to understand – it has the common meaning of being a system of money.
So when the two words are combined together, it literally means a system of money that uses cryptography.
So why would someone invent cryptocurrency? What is its relationship with digital currency? What does the future hold for cryptocurrency? We will explain everything to you in this guide.
A system of money using cryptography – why would anyone be crazy enough to invent something like that? After all, our current financial system works just fine, right?
Not exactly. Our current financial system is notoriously fragile, especially in the developing parts of the world. It may be a shock to some, but there are still 1.7 billion people in the world that are without a bank account. In certain countries, the local currency is so shaky that people prefer to use the currency of another country, such as the US dollar.
Industry pioneers have labelled cryptocurrency as the way of the future, or Internet 3.0 that will revolutionise the way value will be exchanged. The immediate use of cryptocurrency is obvious. Regardless of your age, nationality or income level, cryptocurrency is a borderless currency that brings financial freedom to the masses. All you need is a computer or mobile device and you are the owner of your own wealth. Now this is very powerful, for example, to someone who is unbanked in Venezuela.
So what is the difference between cryptocurrency and digital currency? In summary, cryptocurrencies are digital, but not all digital currencies are cryptocurrencies. For example, some central banks, including the Reserve Bank of Australia, are exploring central bank digital currencies (CBDC). However, whether these digital currencies employ cryptography as part of its technology is uncertain. In fact, there are digital currencies, such as Hong Kong’s Octopus card system, that do not fall within the definition of cryptocurrency, but rather serve as an alternative store of value.
Cryptocurrency is getting more and more mainstream adoption. In 2020, Bitcoin broke the US$20,000 barrier for the first time. Compared to the 2017 bull run, the 2020 bull run is fuelled by an entirely different cohort of people. This time, it is the institutional investors such as Grayscale and high-profile billionaire investors such as Alan Howard are pushing Bitcoin to new highs.
Aside from its rapid price increases, cryptocurrencies are showing promises in a lot of use cases. Ethereum smart contracts are gaining popularity, Ripple is increasing its network with major financial institutions and Bitcoin is acting as a better store of value than ever before.
In short, the future of cryptocurrency is very bright. There is no denial that blockchain technology is a game-changer to this increasingly digital world we live in. Financial freedom and financial inclusion are only the beginning of cryptocurrency. As the infrastructures and regulation around cryptocurrencies start to mature, so will its adoption and application.
About the author
Ting is a finance professional and an accomplished investor. Ting is well-conversed in financial markets, as well as having a background in taxation and law. Having previously worked for a top-tier accounting firm and an US-listed fintech company, Ting decided to pursue his passion in cryptocurrency in 2017 by joining forces with high school friend Mena.
Did you know you don’t need to buy a ‘whole’ Bitcoin-like one pictured above? Note to our readers: as Star Wars fans and with the 9th installment of the franchise due to release as at the time of writing, we feel that it is obligatory to list them out in terms of Light vs Dark Side.
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Coinstash is a registered digital currency exchange based in Australia. Our customers praise Coinstash as one of the most user-friendly, educational, and supportive platforms. Through its live support 7 days a week, Coinstash has accumulated numerous positive reviews from its customers. Coinstash is also one of the only digital currency trading platforms that have participated in the Australian government Austrade’s landing pad program. Find more about BTC Price AUD (Australia) by visiting our BTC trading platform. Note: nothing in this article should constitute general or specific financial advice. Coinstash does not take into account your circumstances when publishing articles. Any content on Coinstash.com.au or related domains are informational only.