What the heck is crypto? And why is everyone talking about it?
This is the article you send your friends when they look at you weird about crypto.
Curious about crypto? Confused maybe? Just want the friend that sent this to you to shut up about it? Either way, you’re here! And you’re asking the same question that everyone else is asking these days too — what the heck is crypto?!
Easy! We’ll answer that for you. We’ll give you a quick snapshot, explain a few key terms, and give you the bigger story. As in —
Once upon a time, a new technology came along that completely changed the world.
Hyperbole? Nope.
It’s like this. Imagine the world before cars — and then after cars. Heck, imagine it before the steamship! That’s how disruptive the technology behind crypto is too.
So what the heck is crypto?
Well, crypto is short for cryptocurrency. Which is a digital payment technology. But the word crypto is mostly used these days as a general reference to an emergent new sector of the global economy. Some people call it the cryptoverse.
The cryptoverse is a bit like Silicon Valley, meets Wall Street, meets 90’s garage band. It’s high-tech, flush with cash, and is literally so up-and-coming that you haven’t heard of it yet.
So welcome to the edgy (sometimes gritty) new frontier! The exciting new parallel economic world of crypto, bitcoin, DeFi, and blockchain. Terms most people have heard of by now, but still don’t understand.
And that’s okay! You’ll teach them.
A Snapshot
First things first. The magic technology behind everything crypto — is blockchain. Remember that.
Second? What’s happening in the cryptoverse is obviously unprecedented, but comparisons aid understanding — so think of the cryptoverse as the Space Race, meets the 90’s dot-com boom, meets the Wild Wild West.
It’s uncharted, exciting, and emergent. It’s loaded with opportunity, risk, and reward. And its development is happening in real-time, right now, while you’re alive.
Exciting right? For sure. But I know you’re still wondering… what the heck IS crypto though?
We’re getting there. But to understand crypto, you’ll need to understand a few things first.
Terms & Technology
In the beginning… there was Bitcoin. That’s right. Bitcoin started all of this.
So what’s Bitcoin? Bitcoin is the world’s first currency built on blockchain technology — it was blockchain’s big debut.
But what exactly is a blockchain? A blockchain is a permanent global contract database. Except, when data gets put on a blockchain, it’s not simply entered into one computer or ledger. Instead, it’s blasted out over the World Wide Web in every direction, where it’s re-recorded and blasted out again, over and over. So there’s really no way to ever erase it or delete it. Which makes it the safest and most transparent contract system there is.
If it’s a digital database, then why is it used for cryptocurrencies? Well, let’s break this down. A contract is just an agreement between two parties. For example: You give me this and I’ll give you that, and here’s the contract that proves it.
Sounds a lot like money, right? Well yes. Because money is essentially a giant contract system — you trade dollars for goods and then you get a receipt. So it makes a lot of sense that blockchain technology is most often associated with digital forms of currency — cryptocurrencies.
But the blockchain is really so much more than a technology for cryptocurrencies…
Web3
Okay. Have you heard of web3, tokens, or smart contracts? If not, don’t panic! It’s easy. Just follow along.
Web3 is just a categorical reference to the next iteration of the internet— it’s an online blockchain ecosystem built on smart contracts and digital tokens. And socially, it represents a movement away from corporate ownership and oversight, to personal and shared ownership and control.
What’s a smart contract then? Smart contracts are just blockchain contracts that allow developers to attach assets and more complicated information to the contract being recorded on the chain. And many of the tokens you see out there today represent these types of contracts.
But the blockchain is much more than smart contracts too — it’s a new and advanced global technology with major improvements to the status quo and vast societal implications.
Blockchain Potential
What improvements? Tons. The jury is in. As a contract recording system, it’s more efficient, effective, transparent, and secure than all the other existing technologies available today.
And what kind of implications? Well, as you can imagine the list is quite long. Companies like Visa, Mastercard, Paypal, and Venmo record contracts all day long. So the implications for just payment processing alone, are staggering.
Soon, you’ll be using a blockchain via your debit or credit card and you won’t even know it.
But when it comes to the impact of blockchain technology on everyday life — the implications associated with decentralization are at the top of the list.
And now we’re getting to the good stuff.
So hang in there! We’re almost done.
Decentralization
What the heck is decentralization? Well, it’s another big topic to unpack, but simply put — it means that there is no central authority. So with regards to blockchain, this implies peer-to-peer contracts and interactions without big companies or intermediaries.
Which, brings us to DeFi.
What’s DeFi? DeFi is short for decentralized finance — basically, personal banking and investing without banks or traditional financial institutions involved or taking a cut.
But DeFi also implies an ethos — a “we the people” sorta tech movement towards cheap and transparent financial services with equitable access to opportunity and prosperity.
So everything happening in DeFi today — is a bit like Occupy Wall Street meets The Boston Tea Party, with Robin Hood and Lady Liberty at the helm.
It’s a growing grassroots movement of people and projects that aim to build personal wealth for anyone with a computer and a few bucks. And, it’s a distinctly principled push-back at both government and industry for their colluded overtaking of power, profits, and personal security.
A Revolution?
Pretty rad, right? Yep! DeFi is drawing a line in the sand. But here is the truly radical and inspiring part — it’s not a two-sided “us vs. them” game anymore. How so? Well, think about it. Who are the banks and who are the governments? Right. We are!
Turns out, banks and governments are just buildings filled with people. (Us!) They’re systems we built to serve our interests, but that have gluttonously outgrown our control. So that today, systems and special interests serve themselves first, and us second.
But do you see? DeFi serves our interests first, again — giving economic power, and thus individual liberty, back to the people.
So how will DeFi change our lives?
Well, the world will keep on turning of course — we’ll all continue to make money, spend it, lend it, and borrow it. But soon, we’ll borrow from ourselves and from each other, companies will borrow from us, and the middle man taking his cut, will be obsolete.
And all that might not seem like very much right now — but in the end, it will be everything.
So there you have it! DeFi isn’t a crazy anarchist overthrow. And it’s not the end of traditional banks either. But what it will be, is a monumental socioeconomic re-org.
Re-org? Yep. DeFi initiates a global reorganization of power by empowering the individual with personal wealth and autonomy in ways the world has never seen.
It’s a restructuring — from trickle-down leadership, control, and profits… to trickle-up everything.
So what’s next for crypto?
Well, blockchain technology is developing at such a rapid pace that it’s hard to know what will happen next, or which network will take the cake. (spoiler alert: they’ll share it!) But just like the World Wide Web itself has been adopted and fully integrated into present-day commerce, so too will blockchain technology permeate all of global finance and industry in the coming years.
So if Bitcoin is the blockchain steamship, then smart-contract projects like Ethereum are the railroad, and (next-gen) smart-contract projects like the Avalanche Network are the automobile.
And while all blockchain generations have their uses, when it comes to everyday use and utility — cars are cheaper, more efficient, and can go a lot more places than trains can.
So where will web3 and blockchain decentralization take us next exactly? Well, now we’re finally getting to the razor-sharp leading edge of the rapidly expanding cryptoverse —
Tech
In terms of tech, we’re talking subnets, new consensus algorithms, and other esoteric terms. Which just means wider, faster, and more efficient networks. Avalanche, Polkadot, Solana, and Fantom are a few of the fastest-growing.
Practical Uses
In terms of practical use, look for projects that; digitalize assets, bridge blockchain utility with everyday use, and introduce new asset value to the cryptoverse.
A good example is Mthrland Finance, which crowdfunds real estate lending and tokenizes global property assets.
And Republic, who recently introduced ILO’s, “Initial Litigation Offerings” that support high-value legal cases for a share of the settlement.
DeFi Projects
Also, look for innovative DeFi projects such as Wonderland with passive income tokens, Aave with interest lending and borrowing, and Olympus Dao, which aims to become a new digital reserve currency.
Social Change
And in terms of radical social innovations, look for projects like The MTHR Project, which aims to synergize human and economic interests through blockchain innovation and 4th sector economics.
And Frog Nation, a quirky, grassroots, and quintessentially DeFi community with its hands in too many projects to mention.
Investing
Clearly, the future of crypto is bold and bright. And where there is growth — there is always opportunity. But when it comes to crypto investing, there’s a lot more to say than we have time for today. So we’d like to offer one quick word of warning before we wrap.
Quick Tip: Prudence
The cryptoverse is incredibly promising, but it’s also very much the Wild Wild West, as well. So do your homework, know who’s behind your project, and understand the value it brings to the table. And understand that just like the 90’s dot-com boom, many crypto projects will ultimately fail.
So, learn, play, and have fun! But obviously — never invest more than you can afford to lose.
So there you have it! A basic understanding of crypto and its potential.
May prudence and prosperity be yours.
