Looking deeper into cryptocurrency is not the same as looking through the NFL odds, there are lots of differences between them.
Today, we look at thinking about cryptocurrency and what you need to know to make better crypto choices. Crypto can be complicated, but we’ve got you covered.
Table of Contents
A Deeper Understanding of Cryptocurrency
Cryptocurrency is mainly seen as a form of investment. However, its secondary use is as a means of monetary exchange. You can use cryptocurrency to make online payments on online websites and to also receive funds.
Cryptocurrency operates the same way that banks work in terms of offering an investment opportunity, a place to keep funds and also make and receive transactions. The main difference between cryptocurrency and banks is who has control.
Cryptocurrency is decentralized, meaning that no one individual has the power to make decisions. All those involved in the network have a say in what happens within the network. This is entirely different from how banks operate.
Another major difference is that cryptocurrency uses blockchain technology to record transactions. A blockchain operates as a type of distributed ledger enforced by a computer network. This is way more secure than using a normal banking system.
Blockchain generates something called hashes that occur in every block. Cryptocurrency hash functions are mathematical algorithms. These algorithms assist in mapping out arbitrary data to what is called a bit array of a certain size that is fixed.
When referring to a bit array, we are referring to an array data structure that will compactly store bits. This structure is normally used to exploit something called bit-level parallelism. This can be found in hardware and helps the equipment perform operations quickly.
It’s important to note that blockchain hashes operate with a one-way function. This means that they are practically infeasible to invert or reverse the computation.
Cryptocurrency: What About Banks and the Government?
The truth is that the government and banks can play a role in cryptocurrency and whether or not it can operate within certain countries.
Although we would love to think that cryptocurrency is an independent source of money, it is truly not. The truth is that cryptocurrency still relies on banks because you would need to use your card to make transactions into your cryptocurrency wallet.
Another shortcoming that involves banks is that not all businesses use cryptocurrency as a means of exchange. This means that you will need to withdraw your cryptocurrency into your banking account to have proper access to the funds at one point or another.
The government also plays a role in cryptocurrency in terms of how they see cryptocurrency. In many countries, cryptocurrency is recognized as an asset, and rightfully so.
If you have purchased the right one, cryptocurrency will increase in value. It’s seen as an investment which is why some governments see it as a tax mule.
The government can also decide to ban or restrict cryptocurrency use. This means that you cannot use crypto freely within your country. Many governments do this because they see cryptocurrency as a threat to their normal system.
Fiat currencies are a way for the government to control the economy. If there is no tax and no fiat currencies, the government may struggle to control the economy and pay for some of its public expenses. Many would not like to admit it, but tax plays a major role in the world.
Cryptocurrency: The Bottom Line
Seeing cryptocurrency differently is important, especially if you plan on using it as an asset. Always research and keep up with news, as this will give you a rough idea of what’s going on globally and within cryptocurrency.
Ensure you check the track record of all the potential cryptocurrencies you would like to purchase, and do not rely on funneled news. Funneled news can become fake news as it has been funneled through many channels. This might lead you to make improper or impulsive decisions on the market.