Cyber currency is a form of digital money i.e. money that exists only in the digital world.
Currencies are a means of exchanging value e.g. I give you a gold coin and in return you give me some food. Coin based currencies switched to being paper based a long time ago to make life simpler. The £5 note in your pocket says … promise to pay the bearer the value of the bill but that has little meaning as we all accept paper currency has value and cannot switch back to using precious metals for all transactions.
Cyber currencies (or crypto currencies) have no paper version, no coins and no promise to pay anything. They exist purely in digital form and have no intrinsic value – only the value assigned by people according to how much supply and demand there is.
They are designed using cryptography i.e. codes which can make transactions tamper proof and ensure each unit of crypto currency cannot be spent more than once.
These currencies started out with very little value or interest except for anyone but people looking to the future when these currencies take over from the traditional. Bitcoin originally was valued at less than 1 cent per coin but in 2021 reached over $60,000 per coin.
Also in 2021, the market capitalisation of all cryptocurrencies was more than $2 trillion. Some people who bought Bitcoin early on, made a fortune.
These are less well known and are a variation on cryptocurrencies. They were developed to counter the price volatility of regular cryptocurrencies. The value of a Stablecoin is linked to something real world e.g. a standard currency. These are not backed by central banks, unlike the standard currencies. One of the best known is Gemini dollars.
The Benefits of Cryptocurrency:
- There is no need for physical storage, safekeeping and shipping complexities
- Can eliminate intermediaries and reduce the costs associated with cross-border transfers
- Can make it possible to include groups of people who were previously excluded from the economy, by not having a bank account
- Cryptocurrency transactions can avoid tracking by government or other authorities
The Danger of Hacking
Cryptocurrency cannot be physically stolen in the way that cash can be, but it can be hacked and exchanges where crypto currrency is traded have been a big target for this.
Criminals Love Bitcoin
As well as possible hacking, criminals love Bitcoin as payment for various illegal activities including ransomware which almost always demands the victim pay in Bitcoin thus making it near impossible to reverse the payment or identify who receives the money.
More recently criminals have changed to preferring Monero for illegal payoffs, but ransomware scammers still demand Bitcoin as its easier for most law abiding citizens to get if they want to pay the ransom.
If you have any experiences with these scams do let me know, by email.