Cryptocurrencies
How cryptocurrencies work, why they’re better than traditional money, how they can improve and where they might be going. (Note: All data in this section updated as of March 30th, 2022)
This article is intended to provide a somewhat thorough introduction to the use of cryptocurrencies as a replacement for traditional money. As such, it will not cover their use in emerging fields such as DeFi, NFTs, Web3, the Metaverse, DAOs etc…(all of those are covered in separate articles).
This piece is over 8K words (a 30 minute read) and is organized into 8 parts, which are summarized below for the tl;dr crowd:
What is a Cryptocurrency? A cryptocurrency is a form of money that is created, distributed and owned directly by the public (as opposed to the government). The total market capitalization of all cryptocurrencies is over $2 trillion as of late March 2022
What is Money? Money has evolved from direct bartering to precious metals to currencies fully controlled and backed by the government and banking system (known as “fiat money”)
What are the Problems with Centralized Money? Government-controlled money represents several problems, most notably the fact that the State has the power to seize your funds, restrict access to your accounts or impose limitations on usage any time they see fit
What are the Benefits of Decentralized Money? Cryptocurrencies remove the need for governments and banks and give consumers full control over their funds – allowing them to store their own assets without fear of seizure, transact directly with other users without regulation, and freely move their funds anywhere in the world
How do Cryptocurrencies Work? Cryptocurrencies operate using three technologies – blockchains, digital keys and consensus mining
Who are the Key Players? Bitcoin and Ethereum comprise over 60% of the market while another asset class known as stablecoins (cryptocurrencies backed by fiat currencies such as the US dollar) make up an additional 10%
What are the Problems with Cryptocurrencies? Cryptocurrencies suffer from numerous problems including high fees, volatility, environmental concerns, criminal activity and MEV
What is the Long-Term Potential of Cryptocurrencies? Some analysts believe that by 2035 a single Bitcoin will be worth $1 million and a single Ether will be worth nearly $200K.
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