Dr. Violet Howard explains what cryptocurrency is and how blockchain works. The video covers why crypto beats traditional payment methods, market capitalization, trading volumes, and why prices swing so wildly.
Foreign. This Cointelegraph video. We're going to explain what cryptocurrencies are and reveal the benefits they have over cash. Don't forget to subscribe to our YouTube channel for new videos about crypto Cash, checks and credit cards all dominated the world's economy for years. But they all have bit big downsides. First, you've got to go through a middleman and they make payments more expensive for everyone because of their fees. Second, these payments can be really, really slow. They can take days sometimes. We don't live in a world where everything shuts down after 5 o', clock, so why should our money? Third, sending money abroad can be a nightmare. A very, very, very expensive nightmare. Fourth, fraud can be a huge problem. Counterfeit bills worth millions of dollars are in circulation, hurting shoppers and businesses. Cryptocurrencies are designed to fix this. Although Bitcoin was technically the first one Invented back in 2008, projects like Digicash were exploring online money in the 1990s. When you hand over a ten dollar bill in a store, it's impossible to spend that same $10 bill somewhere else. Bitcoin also prevents double spending. That's because every transaction is verified and recorded on a blockchain, protecting the network against hacks. The network is run by thousands of computers around the world. This means that it's always online and and very difficult to disrupt. Bitcoin's blockchain can only handle a few transactions per second and fees can be unpredictable. But new technology like the Lightning network helps make bitcoin payments fast and cheap. Thousands of cryptocurrencies now exist. Some of them are directly related to Bitcoin. Like Bitcoin cash, others have been built from scratch, including ether and xrp. And cryptocurrencies that aren't bitcoin are known as altcoins. In the world of wine, higher prices mean you'll normally get a better bottle. Things are different in the world of cryptocurrencies. You can buy some coins for under a cent, while others cost tens of thousands of dollars. But don't be fooled into thinking one cryptocurrency is better than another based on its price. There are some important facts you need to find out too. First, there's the market capitalization. And you can calculate this by multiplying a cryptocurrency's price by the number of coins in circulation. If a cryptocurrency is worth $10 and has 1 billion coins in circulation, its market cap will be 10 billion billion. That's higher than a cryptocurrency worth $20. With 100 million coins in circulation, that market cap would be just $2 billion. Trading volumes are also important, as this tells you how many coins have changed hands in the past 24 hours. A high number means there's strong demand. Now you may be wondering why. What exactly can you do with crypto? An increasing number of shops now accept cryptocurrencies as a payment method. In 2021, PayPal launched a new feature that allows users to buy things at millions of merchants using Bitcoin, Ether, Litecoin or Bitcoin cash. Crypto credit cards have also burst onto the scene, meaning digital assets can be spent in every place for that accepts Visa or MasterCard. After a payment is made, the crypto is taken out of your account and instantly converted into cash. El Salvador has also made Bitcoin legal tender, making it one of the few places in the world where Starbucks, Pizza Hut and McDonald's accept crypto directly. We're still at an early stage when it comes to crypto being used by the masses, but other exciting use cases have emerged too. Decentralized finance services mean you can now take out crypto loans. Some platforms allow you to save your coins and earn interest, offering a far better deal than old fashioned banks. A few cryptocurrencies can also be staked. This is where you lock up your coins and help keep a blockchain network secure, earning new coins, earning as a reward. Cryptocurrencies can even be used to buy things that live on blockchains, like non fungible tokens. If you're new to cryptocurrencies, you might be wondering, why are they so volatile? Well, it's partly down to the fact that assets like Bitcoin and Ether are still pretty new. Some cryptocurrencies have a limit on the maximum number of coins that will ever exist. 21 million in Bitcoin's case. This lack of supply means prices can rise when demand is high. Normal currencies are also controlled by central banks. They have a range of tools that are designed to keep dollars, pounds and euros stable. These controls don't exist in the crypto world, resulting in much bigger price movements on a daily basis. Stablecoins are another type of cryptocurrency that has emerged in recent years. These assets are designed to have a constant value, meaning one stablecoin will always be worth $1, 1 pound, €1, or whatever fiat currency it's attached to. So how do you buy cryptocurrencies? Well, the most common place to go is a crypto exchange. Here you can convert traditional currencies into digital assets. Many trading platforms accept a range of payment methods, including bank transfers and credit cards. Some of these websites can charge high fees, so it's really worth shopping around. If you're interested in buying altcoins, you might need to purchase a major cryptocurrency like Bitcoin, Ether or Teva first. And just like supermarkets don't stock every beer in existence, exchanges don't support any every single altcoin out there. Because of this, you might need to use multiple exchanges. There are other ways of buying crypto too. Bitcoin ATMs are physical machines where you can buy this cryptocurrency using cash. Some shops even offer Bitcoin vouchers that can later be redeemed on exchanges. Both of these methods can help demystify the world of crypto and make coins easier to buy without technical Know how. Cryptocurrencies are changing the world, and in the coming years they're set to become a lot more common. Central banks around the world are now creating digital versions of their own currencies. Facebook wants to offer crypto to billions of its users too. New coins are emerging all the time, and who knows, the one that ends up taking over the world might not even exist yet. If you enjoyed this video, be sure to leave a like and a comment. The Cointelegraph Cryptopedia is your guide to the chaotic space of blockchain and cryptocurrency.
