The Popularity of Cryptocurrency
The Popularity of Cryptocurrency
In recent years, cryptocurrencies like Bitcoin, Dogecoin, and Ethereum (to name a few popular ones) have become all the rage of investment and even payment options. With the most popular Bitcoin reaching over $60,000 for one coin in September of 2021, it has left many people with questions: what is Bitcoin/cryptocurrency? How do you make Bitcoin? How is it affecting the economy?
What is cryptocurrency?
To put it simply: cryptocurrency is digital money—no physical coins or money—used to transfer to people/use in transactions without having to rely on a bank and to avoid transaction fees. Some people use cryptocurrencies as investments, hoping it will increase in value as a stock would. They are stored in a digital wallet, either online, on your computer, or through another medium.
However, cryptocurrencies are not insured by the government, and there are many risks you could face when using/investing in them. Like any investment, the price is always changing. One day you can invest thousands for the next day it to be worth only hundreds. On top of that, cryptocurrency is not insured by the government like regular currency, they do not have the same protections. From the Federal Trade Commission: “If you store cryptocurrency in a digital wallet provided by a company, and the company goes out of business or is hacked, the government may not be able to act and help you get the money back like it could with the money kept in banks or credit unions.”
You also have to be aware of scams. Since it is not a federally protected currency, there are many websites that to jump in the trend and con those beginners looking to get into cryptocurrency. Be weary of any website that promises to make you rich, promises to double/triple/multiply your investment, or even guarantee that you’ll make money at all. Again, cryptocurrencies are like stock investments—do not invest what you cannot afford to lose because the market is constantly changing.
Cryptocurrency information are also likely to be public as well. While transactions are anonymous, they can be published to a public record, like a Bitcoin blockchain. “A blockchain is a public list of records that shows when someone makes a cryptocurrency transaction,” details the FTC, “the information added to the blockchain may include data such as the amount of the transaction. The information may also include the sender’s and recipient’s wallet addresses.” All of this appears as a string of numbers and letters that link to the wallet that holds your cryptocurrency. That data can be used to identify who is using it.
How is cryptocurrency created?
Many popular cryptocurrencies are generated through a process called ‘mining’. Kevin Voigt of NerdWallet describes the process as: “Mining can be an energy-intensive process in which computers solve complex puzzles in order to verify the authenticity of transactions on the network. As a reward, the owners of those computers can receive newly created cryptocurrency.” This is a common method used to create Bitcoin.
How is cryptocurrency affecting the economy?
As of January 2020, there were over two thousand different cryptocurrencies, and over 36 million Americans own some form of them. And while cryptocurrency is ever-changing in values, and could change if ever federally regulated, it has definitely affected how companies can profit in new ways.
The aforementioned blockchains that make up many cryptocurrencies, like Bitcoin, have become the focus of today’s markets. Here is how blockchains have affected business practices now: Cloud computing can use Blockchain to execute smart contracts and resist hacking; Government and public records can use Blockchain to reduce paperwork and fraud while increasing accountability; and Blockchain has improved financial institutions’ cross-border transactions—to name a few examples.
This has also affected the job market. Not only are software engineers more sought after, and as previously mentioned, cloud computing as well. Cybersecurity professionals would also be in high demand due to the increasing fear of hacking—as one of the largest crypto-hack to date was through Coincheck, where they lost over 530 million dollars of the cryptocurrency NEM.
With the increasing demand for the use of cryptocurrencies, so do the need for professionals to utilize them and their technology. The University of Fairfax offers graduate and doctorate programs in Cybersecurity, Cloud Computing, and Software Development, to name a few. Visit us at ufairfax.edu/academic-programs/ to learn more about how our education can get you into the growing industry of cryptocurrencies.
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