You’ve probably heard about things like Bitcoin and crypto by now from news headlines or friends talking. There’s a lot of hype about digital money and how it could revolutionize finance and the world economy. But what is cryptocurrency exactly and does it make sense to use? Here’s my beginner’s guide to understand the pros and cons of crypto adoption.

A quick history of money evolution

Money has taken different forms throughout history – from shells and beads, to minted coins, paper dollar bills, and now digital currencies we access on our phones and computers. New technology has always led to new forms of trade and payments evolving to suit our needs.

Just like social media disrupted how we communicate and gave average people like you and me a global voice for the first time, cryptocurrencies are aiming to shake up global finance too. It’s an exciting concept, but also complex. Let’s break it down…

What is cryptocurrency?

Cryptocurrencies are digital money or stores of value that are secured by cryptography (codes) to control creation of new units and verify transactions on public ledgers called blockchains. The crypto part in the name refers to this encryption technology used to secure networks.

The first popular cryptocurrency created was Bitcoin back in 2009 after the global financial crisis left many people losing trust in banks and governments to handle money properly. Unlike traditional currencies backed by states and financial institutions, cryptocurrencies operate independently on peer-to-peer networks spread across countless computers worldwide.

This means no single entity controls them – a huge change to how we’ve historically thought about money and finance being controlled and issued from the top-down. Now average consumers have access to participate in the world of crypto on more equal footing from the bottom up.

Why are cryptocurrencies gaining mainstream momentum?

In recent years more large Wall Street institutions, banks, tech giants and even nations have started embracing various crypto assets and the underlying blockchain technology innovation. There are a few key reasons driving adoption:

Freedom and ownership – you have full autonomy to freely receive, send and store crypto yourself away from financial middlemen you’d normally have to rely on and pay fees to. It’s programmable money for a digital world.

New financial opportunities – investors big and small are supporting crypto assets hoping to get exposure to new stores of long-term value similar to gold or real estate. 80% of major money managers now have some exposure.

Secure payments capability – cryptography and blockchain networks promise fairly tamper-proof global transactions which traditional banking can’t always offer, especially for moving large sums or doing business internationally.

Mainstream momentum – Validation from major companies like PayPal, Visa, Apple, Google, Meta, Microsoft etc who are now embracing crypto is removing stigma and signalling wider acceptance arriving for both retail and institutional use cases over the coming decade.

Ok I get it, but what are the pros and cons?

PROS:

• Greater personal freedom and control over your money – be your own bank, manage funds securely in a wallet only you control access to. Empowering!
• Invest early to build future wealth – huge growth potential predicted in coming years as mass adoption accelerates across finance and tech. Could be life changing gains up for grabs!
• Cheaper global payments network – cutting out costly middlemen allows for fairer peer-to-peer crypto transactions to anyone in minutes/seconds rather than days.
• Innovative technology expanding capabilities – programmable smart contracts on blockchains allow automation of processes with accuracy for almost any kind of transaction 24/7. Exciting!

CONS:

• High volatility still – reckless speculation has led to booms and crashes. Values fluctuate wildly week to week so money can disappear fast without discipline.
• Security failures and scams – new tech means new attack surfaces prone to hacking or human error. Some have lost savings through theft, dodgy schemes and forgetting passwords locking them out.
• Slow merchant adoption still – you can’t spend crypto as easily as cash. It’s improving with Mastercard and PayPal support, but far from ubiquitous still. Can’t fully replace fiat currency…yet.
• Environment concerns – mining coins consumes masses of computing power demanding more and more energy. Controversy around sustainability impacts from Bitcoin especially.
• Government uncertainty – different countries have varying stances allowing or restricting crypto which could influence adoption trends going forward. Large regulatory changes may happen.

Does crypto make sense as digital money?

We’ve covered reasons why cryptocurrencies have disruptive potential benefits but also real risks to consider before jumping in. As adoption spreads, more solutions may arrive improving ease of use as currency alternatives and smoothing volatility for steadier value storage. Too early to call outcomes.

For now I’d suggest two tips:

1) Inform yourself – hopefully this intro guide helped kickstart your own research before getting involved.

2) Only invest discretionary income – small amounts that losing won’t impact your daily life badly until the technology matures more which could take years. But rewards may be great if you get in early!

I am by no means offering any financial advise, this is purely for educational purposes. I am also an intrigued spectator like you at this stage. But I predict coming decade ahead will reveal if programmable cryptocurrencies revolutionize how money flows globally or fade into monetary history as hype-driven experiments that failed. Exciting times living through potential history in the making that our kids will read about one day!

Time will tell if crypto really makes “cents” digitally I guess! Let me know your thoughts.