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Definition: cryptocurrency
(CRYPTOgraphic CURRENCY) A digital currency that resides in a decentralized network known as a "blockchain." Cryptocurrency, commonly known as "crypto," is not governed by any financial institution or nation, and this absence of a middleman is its major feature. Crypto has spawned an entirely new industry known as "decentralized finance" (see DeFi). See blockchain and crypto glossary.
Illegal Activities
As soon as Bitcoin launched, people began using it to purchase drugs, fake credentials and counterfeit money on the Dark Web, where different cryptos became the primary money transfer method. Used for any number of clandestine money transactions, crypto provides reasonable anonymity, but not total. See Dark Web and Bitcoin address.
When There Is Little Trust in Government
Crypto helps millions of people worldwide move money in countries with authoritarian leaders and formidable financial restrictions, and many believe storing wealth in crypto is safer. Although difficult, it is not impossible for governments to intercept crypto transactions.
A Paradigm Shift
Pundits claim cryptocurrencies are the greatest change in all of finance. Crypto evangelist James Altucher says "the rise of cryptocurrencies is part of a 3,000-year-old historical trend in the evolution of money. It's not a fad, but irrational investors are treating it like it is, and they are going to get burned."
Prices Fluctuate Wildly
Except for "stablecoins," which are backed one-for-one by fiat currencies, the value of a crypto is based on market demand at the crypto exchanges, just like the stock market. Once worth less than a penny, a single Bitcoin topped $60,000 in 10 years. See stablecoin, crypto craze and Bitcoin pizza.
People Started Noticing
Bitcoin's soaring price in 2017 and again in 2021 caught people's attention. Also in 2021, to everyone's astonishment, non-fungible token (NFT) ownership of digital art began selling for millions, although prices dropped dramatically soon after (see NFT).
Centralized Institutions Are Not Exactly Fair
When banks charge 25% interest on credit card balances but pay .05% for savings accounts, it is easy to feel that centralized institutions are not very fair. As a result, when crypto platforms tout interest of 10% and more for lending crypto, it is very appealing.
Why Not Money Out of Thin Air?
The Fed prints money. High-frequency traders make billions buying on one exchange and selling on another. Banks retain a fraction of customer deposits while loaning out the rest. Major blockchains generate additional crypto all day long, and proponents claim that is just as valid (see crypto mining). See high-frequency trading and Spread Networks.
Crypto Is All About Cryptography
Crypto uses cryptographic technologies to encrypt the transactions, create digital fingerprints to link blocks together in the blockchain, and for Bitcoin, solve a mathematical puzzle for the reward. See blockchain, public key cryptography, cryptographic hash function and crypto block reward.
A Ton of New Terms
Salvation for the Future?
Real-Time Crypto Updates
Which Crypto War?
Illegal Activities
As soon as Bitcoin launched, people began using it to purchase drugs, fake credentials and counterfeit money on the Dark Web, where different cryptos became the primary money transfer method. Used for any number of clandestine money transactions, crypto provides reasonable anonymity, but not total. See Dark Web and Bitcoin address.
When There Is Little Trust in Government
Crypto helps millions of people worldwide move money in countries with authoritarian leaders and formidable financial restrictions, and many believe storing wealth in crypto is safer. Although difficult, it is not impossible for governments to intercept crypto transactions.
A Paradigm Shift
Pundits claim cryptocurrencies are the greatest change in all of finance. Crypto evangelist James Altucher says "the rise of cryptocurrencies is part of a 3,000-year-old historical trend in the evolution of money. It's not a fad, but irrational investors are treating it like it is, and they are going to get burned."
Prices Fluctuate Wildly
Except for "stablecoins," which are backed one-for-one by fiat currencies, the value of a crypto is based on market demand at the crypto exchanges, just like the stock market. Once worth less than a penny, a single Bitcoin topped $60,000 in 10 years. See stablecoin, crypto craze and Bitcoin pizza.
People Started Noticing
Bitcoin's soaring price in 2017 and again in 2021 caught people's attention. Also in 2021, to everyone's astonishment, non-fungible token (NFT) ownership of digital art began selling for millions, although prices dropped dramatically soon after (see NFT).
Centralized Institutions Are Not Exactly Fair
When banks charge 25% interest on credit card balances but pay .05% for savings accounts, it is easy to feel that centralized institutions are not very fair. As a result, when crypto platforms tout interest of 10% and more for lending crypto, it is very appealing.
Why Not Money Out of Thin Air?
The Fed prints money. High-frequency traders make billions buying on one exchange and selling on another. Banks retain a fraction of customer deposits while loaning out the rest. Major blockchains generate additional crypto all day long, and proponents claim that is just as valid (see crypto mining). See high-frequency trading and Spread Networks.
Crypto Is All About Cryptography
Crypto uses cryptographic technologies to encrypt the transactions, create digital fingerprints to link blocks together in the blockchain, and for Bitcoin, solve a mathematical puzzle for the reward. See blockchain, public key cryptography, cryptographic hash function and crypto block reward.
Bitcoin, Ethereum and countless new terms emerged in the 2020s, and this encyclopedia contains more than a thousand. For a summary of terms, see crypto glossary.
Many think so. In his book, Kevin Owocki summarizes the vision of leading thinkers and describes how blockchains and crypto innovations can sustain our planet into the future.
For the latest cryptocurrency prices, go to tracking sites such as CryptoCompare.com and CoinMarketCap.com. After this example was taken in 2021, Bitcoin dropped more than 40 thousand dollars before it climbed back to more than 70 thousand. Needless to say, crypto is a volatile market.
The headline in this 2016 issue of PC Magazine had nothing to do with digital coins. The crypto war was between tech companies and governments (see crypto war). (Image courtesy of PCMag.com)