Cryptocurrency is a type of virtual currency secured by something known as cryptography. It sounds quite complicated and advanced, but the reality is that it’s just as made-up as the money we use every day. It’s based on a decentralized network that uses blockchain technology, a set of connected blocks of information on a virtual ledger that contains a list of transactions that have been independently verified.
Cryptocurrency is most famously embodied by Bitcoin, the most popular and successful of all the cryptocurrencies, with a total market value of $656 billion US. Other popular examples include Ethereum ($212 billion), Tether ($84.5 billion) and Binance Coin ($62.6 billion). In total, CoinMarketCap reports there are currently 22,932 different cryptocurrencies with a total market capitalization of $1.1 trillion.
Cryptocurrency is created through a process called “mining”. While it is an energy-intensive process involving computers, it does not involve any kind of mining in the traditional sense. In British Columbia, B.C. Hydro had to impose an 18-month suspension on new cryptocurrency mining due to its high energy consumption.
Despite the complexity of the concepts behind cryptocurrency, the idea is quite simple – it’s a way to keep track of who owns certain things, even if they don’t physically exist. It’s also potentially immune to government interference or manipulation due to not being issued by any central authority.
When it comes to cryptocurrency, it’s important to remember that greed can often get the better of us. It’s important to practice caution and not get caught up in any overly complicated financial schemes.
At the end of the day, the best advice for managing finances is to spend a little, save a little and give a little. Don’t spend more than you earn, and if you are lucky enough to be able to mine cryptocurrency, keep in mind that it takes a lot of energy to do so and that electricity can be better used to heat homes, charge electric cars, power industry and generally keep the lights on.