Bitcoin is a national currency in El Salvador. An exchange-traded fund tracking bitcoin debuted on the New York Stock Exchange in late 2021. And at least $48 million in bitcoin and other cryptocurrency donations have been sent to Ukraine after Russia attacked the country, according to the blockchain analytics company Elliptic.
In the decade since it’s launched, bitcoin has grown into a trillion-dollar market that’s spurred excitement from some cryptocurrency advocates who think it’s the future of currency and payment methods or — insert your noun of choice (the energy grid, the creator economy, Twitter).
But as it’s grown in popularity, critics have called the digital currency speculative, view it as a vehicle to launder money, and say that mining it has environmental consequences.
Here’s an overview of how cryptocurrencies work, what you can actually buy with them, and the regulations (or lack thereof) governing digital money.
What is cryptocurrency in general?
Cryptocurrencies are a type of digital currency based on blockchain technology that you can’t counterfeit. bitcoin, the most well-known type of cryptocurrency, was released in 2009 and first started trading on exchange platforms in 2010.
As for blockchain itself? Here’s an analogy that cryptocurrency journalist and podcaster Laura Shin explained to Marketplace: Think of it like a Google spreadsheet.
It’s kind of like those old ledgers, where banks would keep records of its customers’ funds. Except this one is a lot more sophisticated. Shin said blockchain allows us to have just one ledger that everyone can see at any given time.
Shin said she thinks bitcoin is a more transparent form of currency and that over time, the technology underpinning it could enable financial transactions to occur more cheaply.
