Everything You Need to Know About Cryptocurrency

Updated 08/05/19
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What is cryptocurrency?

Every morning when I unlock my phone—before checking Instagram, emails, or even unread texts—my finger habitually goes over to the Coinbase app where I check the current values of Bitcoin, Litecoin, and most importantly, my modest share of Ethereum. Let me explain.

I first heard about cryptocurrency a year or two ago when it became a buzzword online but very few people really knew what it was and it still wasn't receiving significant coverage from mainstream media. Just what is cryptocurrency? Cryptocurrency is a digital medium of exchange that uses cryptography to secure its transactions and is independent of any central bank. Every cryptocurrency uses blockchain, a public transaction database, where every movement is recorded anonymously, much like a ledger. Created in 2009, Bitcoin was the first decentralized cryptocurrency and is still the most popular. Since its inception, many other cryptocurrencies—also called altcoins—have sprung up on the market including Litecoin, Ripple, Bitcoin Cash, and Ethereum.

Cryptocurrency came back on my radar—and on the radars of many—this past fall, when values quickly began rising and gaining media attention. My boyfriend—a Bitcoin, Litecoin, and Ethereum owner—kept insisting I invest, yet I never mustered up the guts. But even without having any personal stake of my own, cryptocurrency's phenomenal growth in value and media attention had me hooked. I downloaded Coinbase, a platform where you can buy, sell, and track the real-time values of cryptocurrency, and followed its ups and downs (but mostly ups) every day.

Finally, in December, I became the owner of a fraction of one Ethereum when my boyfriend gifted it to me as part of my Christmas present. In the past couple of months, I've watched as my holdings nearly doubled, plummeted, and rose again, now settling in (for now) at a plateau close to its original value. My journey with cryptocurrency has been relatively tame and uneventful, but for those who got in on the financial phenomenon last year or even earlier, it has been quite a ride.

Some have become literal multi-millionaires because of investing in cryptocurrency. Remember the Winklevoss twins from the infamous Facebook legal battle? The twins used money from their $65 million settlement with Mark Zuckerberg to buy Bitcoin back when it was still less than $10 per Bitcoin. But even for those who got in much later (or didn't buy hundreds of thousands of Bitcoins) saw success before the bubble burst in December.

To put things in perspective, if I had invested just a thousand dollars when my boyfriend first told me to in September, I would have had approximately $5250 by the holidays. If I had had even more money to play around with, that five-fold growth would have been even more impressive. Still, as everyone predicted, values declined rapidly toward the end of the year and many cryptocurrency investors dealt with major losses. As with any investment, there's tremendous risk, but the digital and unregulated nature of cryptocurrency makes it even dicier. For now, I'm content seeing my modest share of Ethereum rise and fall and hope that maybe if I just forget about it and let it sit there long enough, I can count myself among the cryptocurrency success stories.

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