What Is a Cryptocurrency?
A Basic Primer For The Uninitiated
Even though Bitcoin has been up and running since 2009 sometimes it still feels like out in the real world almost nobody I talk to knows the slightest thing about it or about cryptocurrency in general. By the end of this write up you should at least have enough crypto street cred to bluff your way through the next conversation with the office crypto bro at the watercooler. You will also know how to buy your first Bitcoin and a few places where you can spend it.
According to stats from Worldometer the global population currently sits at just over 8 billion, and out of that 8 billion only 4.2% of the population has actually taken up cryptocurrency. What that means is if you do not know the slightest thing about it you are not late, and learning about it now means you are still early to the party, so don’t feel bad.
So now that you know that you are not alone, just what in the world is cryptocurrency?
What is cryptocurrency?
It is a type of digital currency, secured by cryptography, that has the following characteristics:
- Decentralization: Cryptocurrencies are not controlled by any State actors or Financial Institutions like Central Banks. Instead, they exist on a decentralized network of computers, or nodes, making them more secure and resistant to fraud or the ability to be manipulated.
- Security: Cryptocurrencies use advanced cryptography techniques to secure transactions and protect against fraud. This makes them more secure than traditional payment methods like credit cards. Since every computer that holds the entire blockchain must come to a consensus on what is a valid or invalid transaction this makes them highly fraud resistant.
- Anonymity: Cryptocurrencies allow users to make transactions anonymously but in a digital way.
- Limited supply: Most cryptocurrencies have a limited supply, which means that they cannot be artificially inflated or devalued by governments or financial institutions. For instance, BTC has a hard cap supply of 21 million coins, meaning there will only ever be 21 million Bitcoins. Another coin, Litecoin, has a hard cap of 84 million.
- Transparency: The blockchain technology behind cryptocurrencies allows for transparent transactions, meaning that anyone can view the transaction history of a particular cryptocurrency.
- Permissionless and Borderless: Cryptocurrency can be used 24 hours a day, 365 days a year without having to wait for banks or other financial institutions or governments to approve your transaction. Often you can send money in times as low as a few seconds to a few minutes, anywhere in the world, with no intermediary.
What is Bitcoin ?— A little history
Bitcoin is a digital currency that was created in 2009 by an unknown person or group using the name Satoshi Nakamoto. Since that time there has been much speculation about just who this Satoshi Nakamoto is or was, or whether they are still alive or not.
If you are interested you can still go back to the old Bitcoin Talk forum and read the conversations between Satoshi and many of the earliest pioneers in the cryptocurrency space.
The first block of Bitcoin transactions called the “genesis block,” was mined on January 3, 2009.
One of the most interesting things about the genesis block was the message Satoshi had encoded in it:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
In the opinion of this author, this was like throwing a gauntlet down against the current financial system, and an act of defiance. After all, Bitcoin came out right around the time of the 2008 financial crisis when government and banking malfeasance reached heights that had not been seen in a long time.
- Could there be a type of currency for everybody that was not dependent on the whims of banks and governments?
- Was it possible to have a currency that anybody could use, that would be more fair and transparent?
- Was it possible to help bank the unbanked, all with a laptop and some code?
These are just some of the things to think about when trying to examine the rise of cryptocurrency and specifically Bitcoin.
5 Ways to Get Bitcoin
Now that I have gotten you interested the next logical question for newbies is, where do I get my first Bitcoin? There are many places to get Bitcoin in 2023, so let’s look at a few of them.
- Coinbase (CEX): Coinbase is one of the most popular and user-friendly cryptocurrency exchanges and has been around for many years. It allows you to buy Bitcoin with a credit card, debit card, or bank transfer.
- Kucoin (CEX): Kucoin is another popular cryptocurrency exchange that allows you to buy Bitcoin with a variety of payment methods. I chose this over Binance because Binance is no longer available to US customers, but Kucoin is.
- LocalBitcoins (P2P): LocalBitcoins is a peer-to-peer (P2P) marketplace that connects buyers and sellers of Bitcoin. You can buy Bitcoin with a variety of payment methods, including cash, bank transfer, and PayPal.
- Paxful (P2P): Paxful is another P2P marketplace that allows you to buy Bitcoin with a variety of payment methods.
- P2P: Find a crypto bro you know to sell you BTC for cash, or for some sort of trade or barter. This is my favorite method because it keeps to the spirit of early crypto, and does not require KYC policies or waiting periods. For this method, you will need a wallet app or a hardware wallet like Ledger or Trezor.
Where Can I Spend Bitcoin?
- Bitrefill: Bitrefill allows you to spend multiple cryptocurrencies on gift cards for hundreds of products all over the world. You can buy everything from hotel rooms to coffee house vouchers to pay-as-you-go mobile vouchers.
- P2P: Again, why not buy stuff from your friends for cryptocurrency, or negotiate to do a job like help someone move or help assemble some IKEA furniture for a bit of crypto? The sky is the limit for this one.
- NewEgg: Yes, you can buy the latest PC hardware for crypto at NewEgg.
- Bitcoin.com List of Merchants
This is by no means an exhaustive list. It is just enough to whet your appetite. I give it because there are still many people who claim that it is nearly impossible to spend your cryptocurrency today, and that is simply not the case.
There is a lot more that could be said about Bitcoin and cryptocurrency but I wanted to keep it short and sweet and try not to bog it down with too much technical jargon because this is aimed at beginners. Maybe some other time. Thank you for reading.
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