Cryptocurrency is digital money that is designed to be used over the internet. Bitcoin, which launched in 2008, is the best-known cryptocurrency. However, many other cryptocurrencies have been created since then, some based on similar technology and others with new features that make them unique. Cryptocurrency is not backed by any government or central bank, so its value isn’t tied to promises by those institutions. Its value is instead largely determined by supply and demand. Because of this, cryptocurrency values can change quickly and dramatically. For example, an investment that was worth thousands of dollars yesterday may be only hundreds of dollars today.
Security
Almost all cryptocurrencies use a technology called blockchain to record and process transactions securely. This system is credited with helping to prevent hacking and other fraudulent activity that can plague traditional payment systems. Using cryptocurrencies eliminates the need to send personal information over the internet, which can be susceptible to cyber attacks. This makes it more difficult for sensitive data to be stolen, and it also provides an extra layer of protection against identity theft.
Transparency
Another key benefit of cryptocurrencies is their transparency. Every transaction that occurs on the Bitcoin, Ethereum, Tezos and Bitcoin Cash networks is public, and there’s no room for manipulation of the money supply or other factors that can affect a currency’s value. This can help to reduce the risk of fraud and can also make it easier for merchants to verify that a customer has the funds to complete a purchase.
Portability
Because cryptocurrency holdings aren’t tied to a financial institution or a government, they can be moved around the world very quickly. This can be helpful for people who travel extensively or relocate frequently, and it’s also useful for those who want to avoid the high fees that can be associated with transferring money between bank accounts.
Spending
Buying products and services with cryptocurrency is becoming more common, and some retailers even offer dedicated “crypto” sections of their websites. For example, luxury watch retailer Bitdial accepts Bitcoin payments for Rolex and Patek Philippe watches. Additionally, many car dealers – including mass-market brands and premium retailers – allow customers to pay for vehicles in Bitcoin. In addition, some insurance providers, such as Premier Shield, now offer home and auto policies in exchange for Bitcoin.
Gifting
One of the most popular uses for cryptocurrency is to give gifts. For example, some people use crypto to reward friends and family for their support or to show appreciation for their work. This can be done by sending crypto to a recipient’s cryptocurrency wallet address or by scanning a QR code with a mobile app. Some content creators, such as authors and musicians, also leave Bitcoin addresses or QR codes at the end of their articles or songs to let their audiences know that they’re willing to accept crypto donations. Some charities also accept cryptocurrency donations. However, it’s important to note that sending crypto as a gift doesn’t provide any of the same consumer protections that come with purchasing goods and services with credit cards or other traditional methods of payment.