What You Need to Know About Blockchain and Cryptocurrencies
For the past 5 or 6 years, one of the main buzzwords on the internet has been blockchain and cryptocurrencies. You probably know a very general overview of these terms, and you are either intrigued by the concept or finding it dull. If you think it really resembles the stock market, you are mostly right. Moreover, the stock market also faced the same criticism and doubts during its early years. But, let’s take a more in-depth view of these two concepts and figure out if they live up to the hype.
Blockchain is a truly revolutionary technology, regardless of whether you like cryptocurrencies or not. In essence, it’s a decentralized network of computers that are constantly working to keep that network alive. It requires massive processing power, and it can revolutionize the world of payments in general.
You can think of it as a system or chain of ledgers that keep track of transactions or ownership of the assets. Each link is regulated by the previous link, so if an irregularity occurs it’s highly unlikely to stay. Meaning if someone tries to steal your money they would have to go after each of the ledgers where your transactions and assets are recorded, which is currently nearly impossible to do.
The problem with blockchain is that it consumes too much electricity and as a result, it’s bad for the environment. Now, this is pretty much true for just about anything nowadays so if you wish to hold that against this technology it is really up to you.
Another thing that’s made possible by blockchain is NFTs or digital art tokens. Meaning, anyone can own a piece of digital art, or content, like a first tweet, a gif, or a wallpaper. This is a very good system of trade, and it opens up a lot of possibilities for artists, or enthusiasts of the sport, video games, digital collectibles, etc.
Cryptos are digital currencies that are getting more and more accepted. People love to buy them and trade them and there is a whole culture revolving around them, much like the stock market. It’s just that they are highly volatile, and their values increase and drop every now and again.
People say they buy them because they wish to support this technology and because blockchain is the future. There will be no more collection of personal data, you can transact anonymously, and you won’t have to rely on banks to do online payments.
This is all true in theory but only a small portion of owners actually uses cryptos to buy other stuff. They mostly hold them hoping their value will increase. In their eyes, these are valuable assets that can work for you and help you generate passive income, much like stocks. However, in order for them to get that extra money someone else needs to get in when the price is higher, which is why it really resembles a Ponzi scheme. The only difference is you are buying a usable currency and not getting a useless piece of paper.