What is Cryptocurrency?
Although there are many different types of cryptocurrencies, they all have one thing in common: they operate on blockchain technology, making them decentralized. Decentralization of financial operations through cryptocurrencies has several efficiencies over the traditional financial system, including:
- Cuts out almost all the overhead costs associated with banks
- Less expensive transactions that can be sent and received internationally
- Inflation or finite supply that’s written into code — no need to trust the Federal
- Financial derivatives like trading strategies and loans can be coded directly onto
certain cryptocurrency blockchains, replacing the need for financial intermediaries.
The largest cryptocurrency is Bitcoin and it’s used as a “digital gold.” Essentially, Bitcoin is a commodity used as a store of value. Ethereum is the 2nd-largest cryptocurrency with a market cap of $210 billion. Developers can develop smart contracts on Ethereum’s blockchain to create decentralized alternatives to traditional banking functions, like lending and trading.
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