The year of 2008 was bad for many people due to the real state crisis that happened worldwide.
What is a Cryptocurrency?
First of all it’s important to know what’s a blockchain (I guess you’ve heard of it before). Putting it into simple terms, a blockchain is a ledger where transactions can occur, are kept forever logged for anyone to see and can’t be modified.
You can say that you’re ‘anonymous’ because each ‘account’ is represented by an address. This means that there is no need to put your name or any other type of personal information to start buying cryptocurrencies (of course depending on where you buy them).
Even though in the general case they are meant to be anonymous, it’s still possible to track a person through their purchases and understand the relation between an address and a specific person. So stay cautious 🙃
How Cryptocurrencies Work?
Technology is constantly evolving and so are cryptocurrencies. There are much better technologies and protocols than the ones used in Bitcoin (despite being the most used in the world as of the time I write this post).
Most projects are decentralized. What does this mean? It basically means that there is no central authority controlling your transactions nor your data.
If you’re keen to data protection and want to be in a world where the opportunities should be equal to everyone, then cryptocurrencies might be the investment you were looking for.
Why Shouldn’t You Ignore Cryptocurrencies?
There are many reasons but in my perspective the most important is: to avoid inflation.
People might not be aware of, but year after year what we own is valued less due to inflation. It’s a system that’s ‘rigged’ and we can do nothing about it except stare at it.
With some cryptocurrencies, there is a finite number of coins that can be produced, which means that these won’t suffer from inflation, like fiat currencies.
Decentralized Finance (DeFi)
Another thing to take into consideration is the new decentralized exchanges which give yet another opportunity for investors to diversify their portfolio.
Nowadays, using e.g. SushiSwap, people can buy cryptocurrencies without having to register in a platform in the traditional way.
People can provide liquidity to the pool and receive interest in return, assuring the decentralized exchanges have assets for everyone.
Decentralized Autonomous Organizations (DAO)
In the traditional system, there are central banks. These decide when and the amount of money to lend to other institutions.
With a decentralized autonomous organization, this kind of decisions are made by the people who participate in that DAO. All the decisions, e.g., invest in another crypto project, change the dynamics of the project, and so on, belong to the people and not to a few selected.
I think DAOs will keep playing an important role because of the opportunities it opens to people who otherwise wouldn’t have this chance.
Non Fungible Tokens (NFT)
You’ve probably heard about non-fungible tokens before. To explain their utility, probably is better to say what’s a fungible token.
When two people exchange two $1 coins, the intrinsic value of each coin received does not change. They hold the same value.
On the other hand, an NFT is unique and it can’t be forged. This opens the world for many use cases such as metaverse, games and such things where people want to show their new objects.
What I’ve described was just a resume of what currently exists in the crypto world. Much more is certainly yet to come!
I really think that cryptocurrencies are here to stay. While I might be wrong, I am amazed with the new businesses, opportunities and communities that have grown so far. Despite all of this, be aware that crypto investment is extremely volatile and is not for everyone.