Let’s talk about what crypto is. Cryptocurrency is a form of digital currency based on a network that is distributed across a large number of computers. The technology allows you to trade crypto directly without going through a central 3rd party like a bank — making it decentralized. Cryptocurrency and its technology are like virtual accounting systems. They keep a record, or ledger, of all transactions on the blockchain.
What is the blockchain? The blockchain is a shared, unchangeable ledger that records transactions and assets across many computers. Making it — you guessed it — decentralized. Virtually anything of value, and its ownership, can be tracked and traded on a blockchain network. This allows for more trust, security, and efficiency in transactions. We’ll touch more on exchanges, decentralization, & centralization in the cryptocurrency space in another post.
Some advantages of crypto include cheaper & faster transfers, transparency, and systems that do not collapse at a single point of failure.
There are also different types of cryptocurrencies out there:
- Store of value — like the most widely known, Bitcoin. These coins simply store value and nothing else. Some people refer to this as digital gold.
- Utility tokens — these tokens actually have uses within a specific ecosystem that allow holders to perform specific actions through smart contracts. Like with $JAM, users can own their content & social identity, and artists, creators, and fans can all earn and generate value for engaging and making moments together.
- Security Tokens — which are like stocks. They represent ownership shares for assets that have value, like real estate, a car, or corporations.
With technology increasingly becoming a crucial part of our lives, the possibilities are truly endless. We’re beginning to see blockchain technology and cryptocurrencies make its way into the mainstream.
This is not financial advice.