A dive into the world of cryptocurrency



A graphic of how cryptocurrency is much like normal money but digital.

Cryptocurrency is a word I hear in my day-to-day business and I had no idea what it was. The way it is talked about seems to have a negative connotation, so I was determined to find out more and see why this connotation is achieved.

Cryptocurrency is a form of online money secured by cryptography, which is a method of protecting information and communications through the use of codes; it is made so that only those who are intended to can read and process the information. Cryptography makes it almost impossible to counterfeit or double-spend cryptocurrency. 

Cryptocurrency can be used to buy regular goods and services, but many people use it to invest in stocks or precious metals.

Bitcoin, which is a form of cryptocurrency, only has 3% of its activity as illegal transactions, according to Antionette Schoar, a professor of finance and entrepreneurship at MIT Sloan.”

Unlike the US Dollar or the Euro, no central authority manages and maintains the value of cryptocurrency. Instead, those tasks are spread out among cryptocurrency users across the internet. 

Cryptocurrency works similarly to dollar bills or credit cards despite not being controlled by a government or authority. Dollar bills and credit cards both have serial numbers that identify them, and cryptocurrency has identification as well. Where they differ is that dollar bills and credit cards are connected to bank accounts with names. Federal banks know when a certain dollar bill is put into a certain bank account based on the serial number and know who’s bank account it was put into because a name is tied to the account. 

Cryptocurrency has accounts but does not tie the user’s name to said accounts.

A major issue with having no name tied to accounts is the use of it for illegal activities like money laundering and tax evasion. Some cryptocurrency advocates highly value the anonymity it provides. They say that it provides safety for whistleblowers and activists under repressive governments. 

The stigma against cryptocurrency based on purchasing illegal products is usually unfactual. Bitcoin, which is a form of cryptocurrency, only has 3% of its activity as illegal transactions according to Antionette Schoar, a professor of finance and entrepreneurship at MIT Sloan. While this percentage goes against the stigma of Bitcoin and other cryptocurrencies, the cryptography behind this currency is very interconnected and makes it difficult to crack down on illegal activity.

The common cryptography that is used to verify and record cryptocurrency transactions is called a blockchain. Blockchain is not a typically used phrase by the general public, especially by teens like myself, but it is a public ledger that records transactions in code. The transactions are recorded in blocks that become linked together on a chain of previous transactions of cryptocurrency. So as the name implies, it is actually a chain of blocks. 

Blockchains provide everyone who uses cryptocurrency with their own copy of this record to create a unified one.  The software logs every transaction as it happens and every blockchain copy is simultaneously updated which keeps all records identical and accurate. 

Despite how confusing cryptocurrency may seem, this was a shallow dive into its deep abyss. As I personally read more about cryptocurrency, I quickly started to understand it and I encourage anyone to learn more about the system that may digitalize the entire world of money.