I love being part of ePay’s Education team and the opportunities it gives me to learn and share my knowledge. Recently I earned my Certified Cryptocurrency Risk Specialist certificate, driven by my passion for learning more about this alternative payment method. I am proud to be ePay’s resident subject matter expert on digital currencies and to share what I learn with our members! This article, focusing on cryptocurrencies, is the first of a three-part series looking at digital currencies.
Everyone has heard of Bitcoin, but what about Ethereum, stablecoin, or central bank digital currency? There is much more to cryptocurrency than shadowy culprits doing illegal things on the dark web! Thanks to the high-flying price of Bitcoin, cryptocurrency has gone mainstream; however, this one cryptocurrency is only the tip of the iceberg.
Bitcoin is the first currency that comes to mind when crypto is mentioned; however, there are thousands of currencies from which to choose. Any crypto that is not Bitcoin is considered an alternative coin, commonly called altcoins. Each cryptocurrency has its own purpose, and Bitcoin was created as an alternative to national currencies.
Ethereum, the number two cryptocurrency based on market cap, is intended to be a decentralized blockchain network rather than an alternative monetary system. The Ethereum network supports smart contracts and decentralized applications (dApps). Ether is the cryptocurrency used to fund the Ethereum network, although most trading platforms use the name Ethereum to identify their coin offering.
Dogecoin was created as a Bitcoin satire and based on a dog meme. Word of mouth and celebrity enthusiasts drove Doge from a value of $.006 per coin on January 1, 2021, to a high of $.74 per coin on May 7, 2021, an increase of more than 12,000%. In other words, if you had bought $1,000 of Doge on January 1, you would have had $123,000 on May 7. Doge dropped almost as fast as it rose, ending the year in the $.15 -$.20 range, still a significant increase from its price at the beginning of the year.
As popular as cryptocurrencies are for investment, it is the underlying technology that may hold the most value. Blockchain is a digital, decentralized ledger that records payments or transactions, similar to an electronic operating system. Blockchain is considered immutable or unchangeable. Once a transaction is verified, any attempts to change it would break the block, alerting all who have access to the ledger of the manipulation. A shared ledger can be used to record or track any asset, whether digital, tangible, or intangible. A non-crypto example of blockchain use is the securities market. In this case, securities would be able to settle in minutes, compared to the days it currently takes.
It has been fourteen years since Bitcoin’s humble beginnings in 2008. Whether or not cryptocurrencies survive in the future, the technology behind them has almost limitless opportunities. By providing immediate shared information it can be used to track orders, payments, production, and much more.
Stay tuned for the next articles in this series, on stablecoin and central bank digital currency, and please contact me at bhudgins@epayresources.org with any questions! I look forward to chatting crypto with you!