Cryptocurrency 101

Attention tech enthusiasts! Disability Advocates of Kent County now accepts cryptocurrency donations. 

This exciting move will allow us to tap into a growing financial market and open up a new avenue for giving for philanthropists. Below are frequently asked questions about cryptocurrency.

How does one define cryptocurrency?

Cryptocurrency consists of digital files used for currency. Cryptocurrencies do not rely on banks or regulatory authorities. Instead, they use a decentralized system that records all transactions using a public ledger called blockchain. 

What types of cryptocurrency are out there?

Founded in 2009, Bitcoin is the earliest and largest form of cryptocurrency. The total combined market value of the world’s Bitcoin is $1.03 trillion. Beyond Bitcoin, there are 1,583 listed on coinmarketcap.com, which is more than all of the fiat currencies in the world.

What can cryptocurrency be used for?

Users can buy and sell goods and services using cryptocurrency, although cryptocurrency must sometimes be exchanged for fiat currency to use in daily transactions. However, most users use cryptocurrency for investing. Cryptocurrencies can be purchased via traditional brokers and cryptocurrency exchanges, and they are stored in digital wallets.

How is cryptocurrency created?

A process known as mining produces new units of cryptocurrency. Miners use special hardware and extremely complex algorithms to add new coins to the blockchain. They receive payment in the form of cryptocurrency units, although this process is not accessible or cost effective for most cryptocurrency users. 

What are the benefits of using cryptocurrency? Since cryptocurrency transactions are stored on the blockchain, they automatically come with proof of sale. Unlike fiat currency, there are no regulatory authorities adding charges or limits to transactions.

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