Crypto is many things — a valuable investment, a disruptive force in the financial world and an exciting technology for developers. It’s also a source of fascination and fear for people who don’t fully understand it.
This fear is fueled by a lack of understanding of crypto’s core concept: the blockchain. The blockchain is the technology that underlies most cryptocurrencies, including Bitcoin and Ethereum. Crypto aficionados will tell you that a blockchain is much like a Google spreadsheet, except instead of being hosted on the servers of an established tech company, it’s maintained by a network of computers around the world that are tasked with verifying existing records, adding new ones and securing the database against hacking.
The record-keeping process is what gives cryptocurrencies their value, proponents argue. Rather than the information being handled in-house or passed through middlemen like brokers, bankers and lawyers, which can increase costs and time, it’s recorded on a ledger that is accessible by anyone who has the password to a specific computer on the blockchain. This makes it almost impossible to fake or alter a transaction.
A blockchain is a distributed, public database that contains information about a wide variety of subjects, from purchases to marriage certificates. When a cryptocurrency is added to the blockchain, it becomes instantly available to everyone on the system. This means that the currency can be used as a form of payment anywhere in the world, and no central authority oversees its use. This decentralization is what makes crypto attractive to some, and frightening to others who see it as a threat to the status quo.
In its early days, crypto was a natural fit for those who wanted to avoid traditional financial systems, such as criminals, tax evaders and people buying illicit goods. It has also become a tool for political dissidents and extremists in countries with authoritarian regimes.
The benefits of crypto are numerous and can be quite compelling, but investors need to keep in mind that the blockchain is still a relatively young technology and it’s not without its faults. It can be volatile, which means prices rise and fall dramatically, and you could lose a significant amount of money if you’re not careful.
As the blockchain continues to develop and the underlying technology becomes more mature, it’s likely that cryptocurrencies will continue to grow in popularity, but you should always diversify your investments and don’t place too much faith in any one asset class. If you are curious, though, it’s a good idea to familiarize yourself with crypto and how it works so you can participate in the future of the global economy. Plus, it might help you make sense of the weirdness that’s currently reverberating throughout youth culture, just as understanding New Age mysticism and psychedelics can help you glean meaning from ’60s counterculture.