What is a cryptocurrency?

Perhaps you’ve heard of Bitcoin, Ethereum, or a range of other cryptocurrencies. Or maybe you have no idea and have only recently stumbled upon ‘cryptos’. It’s certainly a fascinating topic, and one that is getting a lot of attention in the financial world.

So, what exactly is a cryptocurrency?

A crypto is a digital form of money. You can’t physically hold or touch this money as it is only stored and recognised online. What makes cryptos unique is that they use a system called the ‘blockchain’.

This blockchain is a digital record of every transaction ever made for a crypto. It operates on a peer-to-peer network, making it completely decentralised. What this means is that you don’t need a third-party, like a bank, to facilitate a transaction.

Better yet, it’s faster, cheaper, and can also be more secure than banks!

Where did it all come from?

The first cryptocurrency was made in 2009 — bitcoin. It’s the most well-known crypto, and also the most valuable (at time of writing).

Bitcoin had small beginnings. In June 2009, one bitcoin was worth US$0.0001. Today, one bitcoin is worth thousands of US dollars.

It’s made some people a very, very large sum of money.

However, at its core, bitcoin isn’t meant to be a financial asset. It’s meant to replace money as we know it. And to an extent it already has.

Today you can purchase goods from some retailers online or in-store using bitcoin. You can even buy a luxury car or house with bitcoin. And every day more goods and services are being listed in bitcoin.

One day we may be using bitcoin for all our financial needs.

Bigger than bitcoin

However, there is more to it than just bitcoin. There are now over 1,100 cryptocurrencies in circulation, and new ones are added almost every day.

Now, not all of them are successful, and only nine current cryptos have a valuation over US$1 billion. But the fact remains that any one of these cryptos could take-off at any moment.

The reason for both the volatility and impressive gains is down to the fact that the blockchain technology, which underpins all cryptos, is still very new.

One brilliant idea could result in the next, Inc. [NASDAQ:AMZN] or Facebook, Inc. [NASDAQ:FB]. The potential is huge.

It’s why cryptocurrencies have earned a reputation for being the single most exciting financial opportunity around right now.

And we’re committed to bringing you all the latest developments and news. We aim to keep it simple and avoid the jargon. Crypto news for the average Aussie — because you can’t afford to miss out.

But, of course, there are risks.

Crypto's are risky business

There are no ifs, buts or maybes. Cryptos are very risky. No regulators, no safety net, and no rules. We call it the Wild West of investing — and for good reason. We’ve never seen volatility like this.

This isn’t the investment to put your life savings into. This is like nothing you will ever see in the stock markets. The gains are potentially big, but so too are the losses.

But, if you’re willing to learn, and willing to take on some risk, this could be a once-in-a-lifetime opportunity — a cryptocurrency revolution.

The only question is: Are you willing to join?

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Money Morning Australia