Understanding Cryptocurrency: 5 Things To Know Moving Forward

Bitcoin, the first cryptocurrency, was invented all the way back around the time of the financial crisis in 2008. Since then, the often-volatile market has gradually expanded to include thousands upon thousands of alternative currencies, or "altcoins." Today, those altcoins (along with Bitcoin) serve a number of different purposes and comprise a whole new class of investable assets.

Nevertheless, cryptocurrency is still a sector that some find to be less than accessible. So for anyone interested who hasn’t spent countless hours learning about them, here are some key trends to be aware of.

Institutional Investors Have Been Moving In

Cryptocurrencies stopped being the exclusive preserve of "computer nerds" some time ago. On the contrary, major investors and funds have moved into the space in a big way. Already by 2020, for example, PwC was revealing that the total assets under management of hedge funds in the space had basically doubled from $2 billion the year before.

With similar wealth management companies moving in the same direction, it figures that we'll see further institutionalization (and possibly normalization) of the crypto market moving forward.

Newer Generations of Cryptos Are Greener

A longstanding criticism of cryptocurrencies for the forward-thinking, eco-conscious investor has been the energy-intensive way they are produced. That’s still the case for a number of them — notably Bitcoin — wherein each token requires more computation than the last to generate, while the transaction ledger takes up ever bigger storage. The good news is that typically, the more recently introduced cryptocurrencies are orders of magnitude more efficient in a number of ways, and therefore will bring about a lessening of the energy footprint should their adoption increase. In short, cryptocurrency has by and large been terrible for the environment, but the future looks a great deal greener.

Crypto Gaming is Huge

Some have criticized crypto over the years for its relative lack of practical applications. There are more such applications with each passing month, but gaming is proving to be particularly significant in this regard. A gaming industry which has moved progressively toward online transactions and digital assets already, always had potential to become tightly knit with an emerging tech sector that revolves around secure digital transfers.

Games in which cryptocurrencies are foregrounded were inevitable. As such, crypto is beginning to emerge in various corners of the game industry, with the most prominent applications being the purchase of land and goods within online games. Already people purchase the cryptocurrency MANA to buy land in Decentraland, and buy $SAND tokens to transact within the Sandbox metaverse. These are just two of many emerging examples proving that those who have been waiting for digital currency that is useful for specific reasons should be keeping an eye on gaming spaces.

Cards are Making Crypto More Accessible than Ever

Another aspect of cryptocurrency that has left many skeptical is that it's difficult to use for those who aren't used to it. Additionally, not all too many everyday stores accept it anyway. But the emerging phenomenon of the cryptocurrency credit card is now making it easier to spend digital currency. Partnerships with the big networks like Visa are designed so that instead of cash back or other rewards, users get crypto. In essence, though, they should work just like normal credit cards. Which means that the ‘Best Credit Card Hacks’ we’ve previously highlighted will still contribute to sound management.

Bitcoin Is and Will Remain a Popular Long Position

A popular injunction in the crypto evangelist community is to "HODL," a deliberate misspelling of "hold." This is because of the fervent belief that the value of popular cryptocurrencies like Bitcoin will continue to go up in the long run. Although there is, of course, no guarantee of this, for now many are still betting on "HODL" working out.

A little more than a decade old, cryptocurrencies don’t yet appear to be going anywhere. How much impact they'll ultimately have on society remains to be seen. But for those who are curious about the market and technology, an understanding of the basics will go a long way.