If you’ve been a sideline player, watching the cryptocurrency market, now may be the time to get more serious because cryptocurrency is rapidly maturing. And with COVID-19, stock prices have dropped drastically, and cryptocurrency prices have dropped significantly.
Compared to the existing fiat currency system, like the Canadian dollar, cryptocurrency is still in its infancy, but considering the rate at which crypto is quickly gaining more adopters, fiat currency suddenly doesn’t seem so far ahead of the game anymore.
Paper money printed out of thin air and mainly passed around electronically (via Interac e-transfers or credit card payments for example) attempts to remain relevant in the digital world. It is akin to Charlie Chaplain on a big-wheel bicycle with a massive head start ahead of a modern Japanese superbike at full throttle.
What Is Different About Cryptocurrency?
For beginners to understand cryptocurrency, they must first understand fiat currency. In a nutshell, fiat currency is paper that people have agreed represents some value. It has no inherent value because it is backed by a government bank (supposedly based on certain economic factors).
The more closely someone studies the intricacies of fiat currency and its sketchy cousin, fractional-reserve banking, the less appealing it seems.
Now flash forward to the new millennium and, cryptocurrency suddenly offers a more tangible value. Why? Because each type of crypto has a maximum amount that can be created, and it will always be that value.
Unlike fiat currency, where its value is in constant fluctuations (due to exchange rates, supply, and demand, political crisis, etc.).
In addition, how cryptocurrency is valued is very simple: If a cryptocurrency has a supply with little demand from traders and users, then the cryptocurrency’s value will drop.
Alternatively, if the supply of a particular cryptocurrency is limited and the demand is high, then the value of the coin will increase.
The Most Common Cryptocurrencies
There are numerous cryptocurrencies with more being created each day. Here are some examples:
Bitcoin — The first cryptocurrency ever created and is designed to be a viable alternative to fiat currency
