Blockchain/Web3 101 | What is cryptocurrency?

Cryptocurrency is a type of digital or virtual money that uses cryptography (advanced coding techniques) to secure transactions, control the creation of new units, and verify transfers. Unlike traditional currencies like the US dollar or Euro, cryptocurrencies are not controlled by any central bank or government. They run on decentralized networks, usually based on blockchain technology.

How Cryptocurrencies Are Used

• Buying Goods and Services: Some businesses accept cryptocurrencies as payment.

• Investment: Buy and hold cryptocurrencies as an investment, hoping their value will increase over time.

• Remittances: Cryptocurrencies allow for fast, low-cost international money transfers.

• DeFi: Cryptocurrencies are key in DeFi applications, which provide financial services without traditional banks.

Advantages

• Lower Transaction Fees: Compared to traditional payment systems, cryptocurrency transactions can be cheaper.

• Fast and Global: Cryptocurrencies can be sent quickly across borders.

• Privacy: Users can make transactions without revealing their identity, though the transaction details are recorded on the blockchain.
  

Disadvantages

• Volatility: Prices can be very unpredictable, which makes them risky as an investment.

• Security Risks: While blockchain itself is secure, users must keep their private keys safe; if lost or stolen, access to funds is lost forever.

• Regulation: Cryptocurrencies face uncertain regulation in many countries, which can impact their use.