Cryptocurrency for beginners

Crypto isn’t just for finance majors and tech junkies

Your guide to understanding cryptocurrency.
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Everywhere, people seem to be talking about cryptocurrency.

Money has transformed from physical coins and bills in a piggy bank to numbers in a database. Now, to make matters more complicated, the world has moved on to cryptocurrency.

The basics of crypto can be broken down to be easy to understand. Here’s your cryptocurrency starter kit to help you converse with your fellow commerce majors and tech junkies

Why was cryptocurrency invented?

In Canada, most people do their finances online. They must abide by bank formalities and are subject to extra fees such as transaction fees and exchange rates. In other parts of the world, not all citizens have access to secure banks—which puts their finances at risk.

Cryptocurrency offers solutions to these issues of traditional banking. To sign up and start investing in crypto, users can create an account on a cryptocurrency trading sites—of which there are plenty. When compared to setting up a bank account, it’s relatively simple.

Types of cryptocurrency

There are many different types of cryptocurrency, and each have different features. The most popular is Bitcoin, which was the original cryptocurrency launched in 2009. Other popular cryptocurrencies include Ethereum, Litecoin and Dogecoin. 

Dogecoin is based on a meme and started as a joke, but eventually picked up steam. It’s now a legitimate and popular cryptocurrency and is even accepted by Telsa.

Instead of representing respectable and virtuous historical figures, cryptocurrency is valuing what is funny and viral on the internet. Though it may seem like a joke, cryptocurrency is legitimate form of collecting and exchanging money.

Safety of blockchain platform

Cryptocurrency transactions are recorded on a blockchain network. 

Unlike bank transactions, transactions that occur on blockchain networks can be viewed and verified by anyone. This open access means that people cannot manipulate transactions or alter monetary values.

While this open access network sounds like the perfect breeding ground for identity theft, blockchain is actually more secure than credit cards because cryptocurrency networks don’t require any of your personal information. 

Therefore, there’s no risk of your identity being stolen.

Value fluctuates rapidly

The value of cryptocurrency fluctuates dramatically. Since cryptocurrency is so new, it’s difficult to establish how much it’s worth. The value of cryptocurrency changes as a function of supply and demand, actions of investors, the news—and recent activity of Elon Musk. 

The volatility of cryptocurrency means investments are never guaranteed. Experts say that cryptocurrency exchange rates experience much more fluctuation than the stock market.

High energy consumption

Recall that the cryptocurrency transactions are validated by the blockchain network. 

To do this, energy-intensive computers to try to beat other computers so they can be the one to validate the transaction. If your computer validates the transaction, you are rewarded with cryptocurrency. This activity is called Bitcoin mining. 

As people become more competitive in this lottery, they use faster, higher-energy computers—and with many people playing this game, the energy consumption is huge. 

The future of cryptocurrency

Cryptocurrency’s future is still largely uncertain. It still isn’t accepted in most real-life transactions; however, some companies and countries are starting to adopt it. In September, 2021, El Salvador was the first country to list cryptocurrency as an official currency and there is a Burger King in Venezuela accepting crypto.

It remains uncertain if Canada or its resident Burger Kings will be accepting cryptocurrency any time soon.

I don’t know if cryptocurrency will stand the test of time, but maybe there will be a future where my grandkids are buying me Christmas gifts with dog-meme-inspired currency.

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