
Crypto is a bottomless well of weird and interesting projects, ideas and communities. If you can dive past the carnival barkers, self-refuting jargon and fetishized tech, you’ll find a world with fascinating implications for finance, technology, ethics, economics, politics, law and energy policy.
The word “crypto” is shorthand for cryptocurrency and blockchain technologies, which power digital currencies like Bitcoin and serve as the base layer of technologies like NFTs and decentralized applications (DApps) for trading platforms and other financial services. Crypto also includes the communities that revolve around those projects. This is a diverse and colorful group, with right-wing Bitcoin maximalists who believe the currency will liberate them from government tyranny; left-wing Ethereum fans who want to overthrow the banks; and speculators who just want to make quick money.
In terms of actual crypto, what sets it apart from the dollars and euros we use every day is that it’s virtual only, with no physical coins or notes to hold in your hand. Instead, it enters circulation through a technological process that’s been compared to global guessing games and involves computers from all over the world competing to add new information to the database. This process, which uses large amounts of electricity to verify transactions, has become known as proof-of-work.
Once the data has been added to the blockchain, it’s immutable and incredibly hard to hack into. That’s important, because crypto is being used to transact all sorts of things, from sending remittances to family members in other countries to Wall Street traders clearing trades on a distributed ledger. The growing popularity of crypto is making regulators pay attention, and many are now struggling to balance the need to control traditional financial risks with the desire not to stifle innovation in an emerging sector.
Another key difference is that cryptocurrencies typically have a limited supply, whereas fiat currencies such as the dollar are created and printed at will by central banks or governments. This limits the number of coins that can be issued, and it’s a feature that has helped give some cryptocurrencies their value. For example, the creator of the most popular cryptocurrency, Bitcoin, programmed the code to limit its supply at 21 million tokens. Once that limit is reached, the system will stop producing new coins.
Because of these differences, crypto has attracted a unique set of users in its early days, including criminals and tax evaders, people who buy and sell illicit goods online and political dissidents who are barred from using more mainstream payment systems such as PayPal. Some of those users are still there, but the crypto ecosystem is now much more diverse, with a burgeoning community of people who use it to build and play video games, invest in real estate or run social-media and other apps that offer rewards in crypto.
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