I’ve been seeking a way to explain cryptocurrency in plain language to normal people while at the same time conveying its complexities because the complexities are important. You have to understand some of the complexities of cryptocurrency, or cryptocurrency loses its meaning. What’s more, the technology itself is in a liquid state. It’s not that rock-solid bastion of stability that everyone wants. By the time I finish writing this article, there will be some new development in that sphere. That’s how fast it’s moving. Given this and my pedestrian understanding of the subject matter, here are some generalizations.
Cryptocurrency is a Horizontal Structure
Our global financial system is a vertical, pyramidical structure. It’s based on the assumption that humans are separate from one another. The structure is designed to deny and control access to resources.
Cryptocurrency is designed as a horizontal structure like a ladder laying flat on the ground. It’s based on the assumption that humans are interconnected to one another. The structure is designed to grant and allow access to resources.
Cryptocurrency is designed to level out some of the financial playing field. For this reason, cryptocurrency is defined as money for the people.
Cryptocurrency is a Voluntary System
Traditionally, individuals participate with financial systems that are based on threat which makes these systems imposed systems with rules of access and denial. Cryptocurrency is a voluntary system.
Cryptocurrency is Global
Anyone and everyone in the world may participate with cryptocurrency. Cryptocurrency is borderless.
Cryptocurrency is Cryptocurrencies
There’s no such thing as one cryptocurrency. There are many cryptocurrencies. Bitcoin is one. DigiByte, Litecoin, and Bitcoin Cash are all cryptocurrencies.
Cryptocurrency is Planned Currency
Cryptocurrency is designed. It has a purpose. That purpose is to serve individuals. It’s designed to allow anyone to participate, and it’s designed to create stability. To accomplish this feat, programmers plan out the elements. Therefore, each cryptocurrency is different because it will have different planned elements.
What makes it the same is that it’s cryptocurrency. To be defined as cryptocurrency, it has to have the following elements: 1. The intent to serve direct person to person interactions, 2. A blockchain ledger, 3. Miners, 4. A certain amount of “coins” or “tokens” that will ever exist and a means to bring those coins and tokens into the system, 5. Decentralized nodes storing the ledger, 6. Participants, and 7. Participant control of the private key to use the system.
If you’re missing any of these seven elements, you’re dealing with digital money, not cryptocurrency. Digital money is when someone other than you controls your money. What makes it cryptocurrency is the intent expressed through the technology that the individual is in control his or her money.
Cryptocurrency is Decentralized Currency
Cryptocurrency means that the ledger that stores the information about your money is stored all over the planet in distributed nodes, that anyone can set up a node, and that there’s no one person or group of people that can create effective control over the system.
Cryptocurrency is Not “Digital Money”
If you’ve ever used a debit or credit card, you’re using digital money. Cryptocurrency is not digital money.
Again, Cryptocurrency is Decentralized
Anyone can create a blockchain and declare that they have a cryptocurrency, but if it’s not a decentralized system that anyone can access and use without permission that has the specific elements designed to create stability, it’s digital money, not cryptocurrency.
Cryptocurrency Has No Government Control
Cryptocurrency can’t be regulated. By trying to impose old controls on new technology, some governments are making the adoption of cryptocurrency difficult for its citizens and stunting that country’s ability to compete in a radically changing global economy. Other governments are accommodating the technology and working with it. How a particular government approaches cryptocurrency will determine its place in the global economy as power structures shift.
Cryptocurrency is Money for Grownups
With cryptocurrency, you’re responsible for your money, and you can do anything you want with it twenty-four hours a day, seven days a week. You can send money to anyone at any time with cryptocurrency. If you want to buy a car, and you have the currency, you can spend the money instantly (though it has to be confirmed on the blockchain which takes time) with no holds or permissions required. You control your money. There are no rules for when and how you use it other than the rules for the technology itself.
For this same reason, there’s no one to blame if you don’t understand how the technology works and you make a mistake. There’s no company to sue. You carry the entire burden for your money, and there are some definite risks involved.
Cryptocurrency Doesn’t Require Investment
You don’t have to spend money to learn about cryptocurrency or even to participate. All you have to do is download a wallet (the software that allows you to access a blockchain). This gets you acquainted with security processes involved with cryptocurrency, things like “seed phrases” and two-factor authentication. An Exodus wallet can give a beginner a good look into this world because it allows you to hold multiple currencies, and it’s easy to use. Vimeo has some Exodus videos that allow the newbie to get set up in twenty minutes or so.
Some currencies, like Bitcoin Cash, will even send you a little cryptocurrency once you set up their wallet. If you’re on Twitter, the DigiByte community will do the same if you just ask. These are easy ways to acclimate to a new way of thinking about money and currency and to keep one eye on where things will be moving once cryptocurrency takes off. Even if adoption isn’t for some years to come, it’s good to start now getting acclimated because there’s a learning curve involved. It takes time.
Cryptocurrency Knowledge Is Like Owning Some Insurance
Understanding how a wallet app works and a basic understanding of cryptocurrency is like owning some insurance. In case of upheaval in the financial sector, you’re aware of the alternatives available and how to use them. For this reason alone, it’s worth some time out of the week to experiment with the basics.