Investing For Canadians All-in-One For Dummies

Chapter 1

What Is a Cryptocurrency?

IN THIS CHAPTER

Looking at the what, why, and how of the advent of cryptocurrencies

Getting an overview of your first steps before starting your crypto journey

So you’ve looked at the title of Book 6, and your first question is probably this: “What the heck is a cryptocurrency, anyway?” Simply stated, a cryptocurrency is a new form of digital money. You can transfer your traditional, non-cryptocurrency money like the Canadian dollar digitally, but that’s not quite the same as how cryptocurrencies work. When cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies.

However, what sets cryptocurrencies apart is the technology behind them. You may say, “Who cares about the technology behind my money? I only care about how much of it there is in my wallet!” The issue is that the world’s current money systems have a bunch of problems. Here are some examples:

• They require a “trusted” third party to verify transactions.
• Payment systems such as credit cards and wire transfers are outdated.
• In most cases, a bunch of middlemen like banks and brokers take a cut in the process, making transactions expensive and slow.
• Financial inequality is growing around the globe.