What is cryptocurrency?
Cryptocurrency refers to virtual money or digital assets. Bitcoin is perhaps the most well-known example. While some view it as a scam, others believe it has the potential to replace traditional fiat currencies like the dollar and euro.
The supply of fiat and crypto
Fiat money is not limited in supply and can be printed by central banks to drive economic activity. On the other hand, many cryptocurrencies have a predetermined maximum supply. This scarcity often leads to an increase in their value over time.
It's important to note that not all cryptocurrencies have a capped supply. Cryptocurrencies like XRP are designed to function as currencies, and their supply can be expanded. Bitcoin, however, acts more like a store of value rather than a replacement for fiat currencies.
Is cryptocurrency a scam?
While there are scams in the cryptocurrency space, many coins serve genuine purposes. It's crucial to rely on trustworthy websites or banks when dealing with cryptocurrencies. Most coins have specific use cases, ranging from in-game currencies to stablecoins.
The legality of cryptocurrency varies across countries. While some claim that Bitcoin is commonly used for criminal activities, it is not the ideal choice for such purposes. Bitcoin transactions are public and can be traced back to individual wallets. Privacy-focused coins like Monero exist to address these concerns. However, fiat money also has its share of criminal use.
A common argument against cryptocurrencies is that they lack ties to real businesses compared to stocks. However, this argument is weak, as it fails to explain why fiat money holds value despite its infinite printing capacity. Many businesses actively invest in cryptocurrencies, and both forms of currency rely on technology and mathematical principles. Cryptocurrencies simply employ more robust mathematical foundations. Wealthy people often own both fiat and cryptocurrencies, highlighting their economic value.
Is it bad for the environment?
Traditional money printing has no defined limit and consumes physical resources that are not sustainable in the long run. Certain cryptocurrencies are designed to donate to environmental causes, but trusting such organizations is a personal decision.
Using cryptocurrencies can be as simple as using a bank card. The technology behind newer cryptocurrencies continuously improves. Newer coins tend to consume less energy. Bitcoin is known for its significant energy consumption, but a substantial portion of the Bitcoin network relies on green energy, particularly hydroelectric power.
If you're interested in my thoughts on the environment, I have another page that discusses the topic, although it does not specifically address cryptocurrencies.The environment
What about NFTs?
Innovations and progress often face initial challenges and criticism. NFTs (Non-Fungible Tokens) are no exception. Before dismissing them, it's important to understand the problems they aim to solve. Traditional art faces similar challenges.
The problems associated with NFTs, which differ from traditional art sales, might be related to the early stages of implementation. NFTs are likely here to stay, they will continue to evolve. In the future, certificates or additional safeguards may be implemented. NFTs are expected to find applications in gaming. It's worth noting that art theft existed before the NFTs became a thing.
Digital payments, including cryptocurrencies have the possibility of transactions being blocked or restricted. Unlike physical money, which can be freely exchanged, digital payments can be subject to limitations imposed by authorities or financial institutions.
Bitcoin, in particular, was created as a decentralized currency intended to challenge traditional banking systems. Its design was meant to provide an alternative to the control exerted by banks and governments over financial transactions. It aims to offer a more inclusive and censorship-resistant form of currency. Some cryptocurrencies will likely stick even if the government decides to make their own cryptocurrency coin. Certain countries are researching this.
Should you invest in crypto?
The decision to invest in cryptocurrency depends on various factors. Only invest in projects you trust and allocate funds that you can afford to lose. If you're new to cryptocurrency, consider exploring the top coins.
Many banks now allow the purchase of cryptocurrencies. Using banks provides added security by ensuring you won't lose access to your assets if you forget your password. However, not all banks offer interest on your crypto holdings.
Popular platforms like Binance and Coinbase can be used for cryptocurrency trading. Although with small trading fees. Additionally, transferring cryptocurrencies typically incurs fees. However, certain cryptocurrencies like NANO have no transfer fees.
Earn interest on your cryptocurrencies
Platforms that offer interest on cryptocurrencies are worth considering. You may not have direct access to your private keys, which is a risk to consider. My preferred platform is Nexo, although identity verification is required.
Nexo offers the nexo token, which allows you to get the highest interest rates when holding 10% of your balance in the token. While other platforms exist, I find Nexo to be professional and trustworthy.Nexo
Get free cryptocurrency
Not everyone has the financial means to invest in cryptocurrency or the desire to invest significant time. However, there are ways to acquire small amounts of crypto without sacrificing too much time.
Brave browser, similar to Google Chrome. But it blocks ads by default. It offers small ad notifications that reward you with BAT tokens when enabled.Download Brave
While there are cryptocurrency faucets that provide free crypto, they often barely yield rewards for your time. Alternatively, if you're willing to invest time, consider creating videos on platforms like Odysee, which rewards users with cryptocurrency. Odysee operates similarly to YouTube.