Crypto Crazy:
A guide to understanding the basics of cryptocurrency
A couple weeks ago, I went to Miami for a vacation and it also happened to be Crypto Weekend. There was a big cryptocurrency conference that thousands of people were in town for. While laying on the beach, a plane flew by with a banner saying “ Crypto Made by Veterans”. Seconds later, another plane flew by advertising another type of crypto. I kept meeting people in Miami for the crypto conference all throughout the weekend and saw so many advertisements for different brands.
Before this, I did not know much about cryptocurrency or had much interest, but my vacation made me want to learn more about the topic. As cryptocurrency becomes more relevant on social media and grows to become a currency that can be widely used, we will see new types of cryptocurrency, what it could be used for, and why people are hesitant to invest in it.
Cryptocurrency
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers (Frankenfield). In simpler terms, cryptocurrency is a digital medium of exchange where transaction records are stored in a collection of books across a computerized database system. These transactions are managed by "miners" who ensure the accuracy of the information. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation (Frankenfield).
Types of Crypto
Bitcoin was the first type of crypto to come out in 2009 and is the most popular. There are several other types you may familiar with such as:
DogeCoin
Litecoin
Namecoin
Ethereum
Tether
How Crypto Can be Used
We are in an era where everything is becoming digital, so it is no surprise that digital currency is becoming popular. As of right now, Crypto is not normalized. In the past year, it has taken some big leaps. Two NFL Players chose to have their salaries converted to Bitcoin. Elon Musk has recently announced his electric car company, Tesla, would accept Bitcoin again once it can be mined using half clean energy. El Salvador passed laws to adopt Bitcoin as legal tender and they will use volcano power to mine it. These are just a few examples of Bitcoin is leading the way to making crypto a widely used currency.
There is a growing list of companies that are allowing people to use cryptocurrency to buy items or services including Overstock, Expedia, Newegg, and Dish. This is just a small list, but there are tons more. There are also many third party websites that will let you convert your cryptocurrency in exchange for dollars.
The Hesitancy
Crypto can be used for money laundering and tax evasion. For example, Bitcoin transactions can be done without revealing personal information or identities. This could potentially lead to more cases of fraud. Many people report being lured to websites that look like opportunities to invest in cryptocurrencies, but it turns out to be a scam. Below you can see the reports and losses from those investment scams over the past 4 years.
The US treasury has called for stricter cryptocurrency compliance with the IRS. This will likely cause investors to be upset and**
Cryptocurrency is not stable. The value of crypto can fluctuate at any time due to a simple tweet. When Musk tweeted in favor of it, prices jumped. However, when he expressed his dislike for it, prices slumped.
Crypto may seem harmless because it is digital, but it takes a lot of energy to mine the coins. The energy bill for mining crypto keeps rising and it is adding to the current climate crisis. One Bitcoin transaction can use the equivalent of an average US household’s energy for 53 days.
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