1) Cryptocurrency is powered by blockchain technology
Cryptocurrency is a form of payment that can be used to purchase goods or a service - just like how the dollar is used today. What makes cryptocurrency so different from the dollar or any other currency, is that cryptocurrency is powered by blockchain technology. Blockchain technology is a system that is able to record information, like a transaction, and it is nearly impossible to eliminate or delete the record of that transaction once it is in the network. The transaction is the block and the continuous record of the transactions is the chain. Because the transaction is recorded, it is nearly impossible to manipulate the transaction. The blockchain network is created by multiple computers around the world that work to power the blockchain - you can even use your own machine; the machine that powers the blockchain technology is also known as a “node”.
2) There are multiple cryptocurrencies
You may have heard of the famous crypto currencies like Bitcoin or Ethereum, but in fact there are over 6,500 cryptocurrencies as of September 2021 - and the number continues to grow. Although the other 6,498 currencies may not be the most popular, these coins can still be bought and sold. Although these coins may not have the biggest following, there is still a possibility that one is recognized for its great utility and value and shoots its way up to being one of the most popular coins and becomes “the next big thing.”
3) Not all cryptocurrencies do the same thing
It’s very important to know that not all cryptocurrencies try to accomplish the same goal. Some of the technologies behind cryptocurrencies can vary due to their different goals. For example, the famous Bitcoin was created as a digital currency so that people could send a form of payment over the internet quickly and securely without needing a center of control. When using dollars to make payments online, the transaction has to be validated through a central system (that’s why payments say “pending” on your credit card statement when you initially make a purchase). On the other hand, Ethereum is not only able to serve as a form of payment without the need of centralization, but is also able to create digital contracts with its technology. These digital contracts are also known as “smart contracts.” Smart contracts are able to define specific rules and cannot be deleted, and you cannot reverse interactions with them - a very safe and secure way to establish and send contracts.
4) The price of Cryptocurrency is determined by multiple factors
Figuring out how to value a coin can be a lot more difficult to do than a traditional stock. In fact, there are multiple factors that must be taken into consideration when trying to value a coin. One of the biggest factors is demand. The more people and institutions demand and purchase a particular coin, the more valuable the coin becomes. High demand can be due to the fact that the technology behind the coin is proven and secure - therefore giving the coin strong utility. The amount of nodes also plays a factor in the value. The more nodes, or machines, that are powering the blockchain the stronger the network behind the coin becomes. This makes the coin less prone to market crashes. Cost of production is taken into consideration as well. Cost of production is the phrase used to describe the cost it takes to operate the blockchain technology behind the coin.
5) You do not need to buy a full crypto coin to own it
Much like the US dollar, you do not need to purchase a full crypto coin to own it. Just like how you can own .50 cents and not one dollar, you can own .50 Bitcoin. So technically, there is no amount of dollars that is too small to purchase bitcoin. For example, you can use 75 cents to purchase bitcoin and although that may not get you a large amount of bitcoin, it can still purchase a tiny fraction.