Cryptocurrency is money that’s digital and decentralized, meaning no central bank or government regulates it. Rather, its security relies on a technology called blockchain. It’s a record of transactions that’s constantly re-verified. That way, it’s impossible for anyone to change past transactions or add new ones without everybody else knowing about them.
Blockchain makes it possible for people to send and receive funds instantly worldwide, removing the need for middlemen like banks or brokers. It also means that transfers are cheaper than traditional currencies and wires. For some consumers, especially in developing countries, this can be a lifesaver.
One of the best things about crypto is that it can be used to make payments at any time, on any device with an internet connection. That gives it huge potential for use in places where traditional banking isn’t available, such as the 1.3 billion adults who don’t have access to banks or other financial services.
Another benefit of crypto is its transparency. Every transaction on the Bitcoin, Ethereum, and other major cryptocurrencies is published publicly in an online ledger called a blockchain. This means that everybody can see exactly what is being paid for and by whom, so there’s no room for manipulation.
There are also no middlemen with cryptocurrency, so consumer protections may be weaker than with traditional products. While credit cards have safeguards to protect consumers from fraud, there’s no comparable system for reversing crypto payments or recouping losses. Furthermore, while financial institutions operate during business hours, a blockchain works 24 hours a day, 365 days a year. That can lead to delays in transferring funds, but it also makes it harder for thieves to hide or steal cryptocurrency.
The value of cryptocurrencies can be very volatile, meaning that their prices can move up and down quickly. This can be a challenge for investors who are hoping to hold onto their investments for the long term, but it’s also made them popular with traders who try to capitalize on small movements in price.
As with any investment, it’s important to understand what you’re investing in before buying crypto. Look for details about how the currency is being used, including by large companies and what the project’s goals are. You should also pay attention to who’s leading the project. Those who are experienced in the space can help you evaluate whether the currency or project is worth your while.