Touted as the next big thing in investing, cryptocurrency has a huge presence across the internet. It’s a fascinating subject with many facets. Here are five interesting facts about cryptocurrency.
1. Mining Cryptocurrencies
People who participate in cryptocurrency exchanges commonly use jargon such as mining and blockchain. These terms can be jarring or confusing to people who are new to this topic, but doing some research can help you learn the lay of the land. When people discuss mining cryptocurrencies, they’re referring to seeking out and verifying transactions to make money without necessarily needing to purchase cryptocurrency.
DeFi refers to decentralized finance. You can think of this concept like Wall Street or the stock market for cryptocurrencies. You can participate in the USDC Exchange, access services such as trading and borrowing in bitcoin and set up automatic transactions, all without needing to go through a bank or other legacy institution. DeFi is enjoying high levels of popularity due to the number of associated tools and services and because not needing to go through a legacy institution means you don’t need to pay any related fees.
3. Central Bank Digital Currency
As cryptocurrency grows in popularity, it’s become a more attractive investment opportunity for governments as well as the general public. When a nation’s government wants to get involved in cryptocurrency, it begins developing an entity called a Central Bank Digital Currency, or CBDC. A CBDC would be a bank for a digital version of a given nation’s currency, such as the United States dollar or the Chinese yuan. However, no nation has a CBDC yet.
4. Related Issues
Like any new technology or market, cryptocurrency comes with related issues and challenges. Some of these challenges are directly related to features of the market that consumers may find attractive, such as the unregulated nature of the market and its relative anonymity. While these features have their good points, they can also put cryptocurrencies and their investors at higher risk of being affected by terrorists and other cybercriminals. Other issues are concerning on a global scale, particularly the potential for cryptocurrency to cause environmental harm. Namely, blockchain and cryptocurrency require massive amounts of electricity to run, larger than the amounts required to power some entire countries, which means it can be a large contributor to climate change in areas dependent on fossil fuels.
Cryptocurrency can be affected by all kinds of factors, some at the same time. This means most cryptocurrencies are incredibly volatile. They can begin with very low value and experience steep rises in value in very short amounts of time. By contrast, they can also fall in value incredibly quickly. If you’re interested in participating in cryptocurrency, you need to be prepared to deal with this aspect of the cryptocurrency markets.
Always do your research and speak with experts when you begin developing an interest in topics such as cryptocurrency. If you’re looking to get into cryptocurrency, you should take things slow and follow expert advice when you’re first getting started.