Crypto is an ever-growing realm of strange, speculative, and sometimes fascinating projects that intersect with finance, law, economics, engineering, art and energy policy. It’s also a place where fortunes can be made at an astonishing pace. From Dogecoin millionaires to Lamborghini-driving Bitcoin bros, the boom has minted new billionaires at a rate that’s tough to compare to any other industry in history. Many of these riches could vanish if the market crashes, but enough has been cashed out to ensure that crypto will be with us for decades to come.
Most people who hear the word “crypto” think of cryptocurrencies like Bitcoin and Ethereum. But the term really encompasses a wide range of technologies that use blockchains, which are distributed ledger systems that power everything from digital currencies to NFTs to DeFi trading protocols.
The idea behind blockchains is to create a decentralized, trustworthy system for recording and verifying information in an encrypted way. In practice, that means a network of computers all over the world maintain a copy of a database, add and verify new entries, and secure it against hackers. It’s a bit like a fancy Google spreadsheet, except it’s open source and owned by everyone.
People have used crypto as a means of payment, a store of value and for investing. Some cryptocurrencies are pegged to fiat currencies, which makes them useful for international transactions. Other cryptocurrencies are built to solve specific problems, such as speeding up transaction processing time or creating non-fungible assets (one-of-a-kind trade cards that can’t be duplicated).
There are more than 4,000 different cryptocurrencies in existence. The prices of most of them constantly fluctuate. Some, like Bitcoin and Ethereum, have become well established as digital currencies, while others have more niche uses. Some, such as Stablecoins, seek to stabilize their price by pegging them to the dollar or other real-world assets.
Despite their wild price fluctuations, most cryptocurrency investors believe that in the long run they’ll be worth more than fiat currencies like the dollar. Some even believe that they’ll eventually replace them. That’s a big gamble, especially since the vast majority of cryptocurrencies aren’t widely accepted as a means of payment and most people hold them only as an investment.
The most successful applications of crypto are in finance and finance-adjacent fields, from Wall Street banks using blockchains to settle foreign transactions to remittance services that send money across borders and digital wallets that let people buy goods online. But the crypto boom has also given rise to experiments outside the financial world, from crypto social clubs to blockchain-based wireless networks and blockchain-powered restaurants.