The technologies behind cryptocurrency

America as a whole has heard so much about cryptocurrency over the last few years. Most Americans have heard words such as blockchain or heard the term NFT (non-fungible token) but many don’t know how these work.

Blockchain, the foremost technology behind cryptocurrencies, passes around fragments of each file on different server computers. No one document will ever be on a singular system.

No hacker could get to each system in time to get their hands on an entire document.

According to IBM, many companies and corporations, such as Walmart, have started using blockchain to store data.

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.”

Cryptocurrencies also use blockchain technology, even IBM’s website acknowledges this.

“Bitcoin is an unregulated, digital currency. Bitcoin uses blockchain technology as its transaction ledger.”

The fact that cryptocurrencies are “unregulated” is one of the reasons that they are appealing to investors. Along with this, crypto isn’t confined by national borders, and transfers are instantaneous and hard to be tracked. 

Crypto has historically been plagued by schemes that are illegal in the stock market, such as, . a scheme, known as pump and dump.

According to Investopedia, “Crypto pump-and-dump schemes operate in a fashion reminiscent of the early days of the stock market. During that time, a group of traders wreaked havoc in the markets by manipulating prices through purchasing in groups.” 

Due to the lack of regulation crypto can be used for illegal activities such as money laundering. When investing in crypto it is imperative to watch out for illegal activities and make sure you’re not falling into any schemes.

Crypto prices fluctuate based on supply and demand, similar to regular markets. With the limited tangible use for crypto, the demand comes from people thinking they can make money off of it.

This concept is also how an NFT works. NFTs started as a way for artists to sell their art online, being a type of crypto meant there could only be one so buying an NFT helped support artists and keep art valuable. 

However, NFTs have become more of just a Crypto with people trading them when prices increase to make a profit. 

Crypto is an ever-changing ecosystem full of opportunity and illegal action. If you are thinking of investing, financial experts have a common sentiment about crypto: Be careful.