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Making crypto less cryptic

July 13, 2022
clock 3 MIN READ

The word “crypto” is derived from the Greek word Kryptos, or hidden. How appropriate given that for most of us, cryptocurrencies and crypto assets are an intangible phenomenon and not easily understood by most. Let’s try to demystify the emerging currency just a little. 

So, what exactly is crypto, and why did it emerge? Cryptocurrency is a digital asset that can be created using blockchain technology and is stored in a digital wallet without any singular central authority. This decentralized structure not only provides anonymity and can exist outside the control of governments and central banks, but it should (in theory) make it possible to buy, sell, and exchange instantaneously, transparently, and without the need for a bank or other payment processing middleman. 

Crypto gained momentum in the global financial crisis’ aftermath, with bitcoin emerging as the most recognizable cryptocurrency. We all know that the value of bitcoin has increased many fold (in dollar terms) since we first became vaguely aware of it, and we’ve all watched in amazement as its value has both spiked and crashed several times over the years. 

However, it’s also important to know that here are other popular cryptocurrencies that you may (or may not) have heard about as well, such as dogecoin, Ethereum, litecoin, Solana, and many, many more. Did you know there are more than 10,000 cryptocurrencies, also commonly referred to as coins, with more being introduced all the time? 

These cryptocurrencies each differ in what they represent and how they’re created (sometimes called mining). It remains to be seen whether any of these should be treasured, like a speculative growth investment, or prove worthless. Some pundits believe crypto is a bubble with Ponzi scheme characteristics, while others believe it’s built on a game-changing technology that will usher in an era of world peace.

What we can tell you is that crypto is a rapidly evolving marketplace with new applications built on the underlying blockchain technology emerging all the time, and the entire category of crypto appears to hold fascinating potential. 

 

Disclosure: Investing involves risk, including loss of principal. Carefully consider the investment objectives, risk factors and charges and expenses before investing. Information presented is intended to be educational and should not be construed as investment advice.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional.

There are risks involved with investing, including loss of principal. The value of an investment and any income from it can go down as well as up. Investors may get back less than the original amount invested. Returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Investment may not be suitable for everyone. Diversification may not protect against market risk. Digital assets are highly volatile, unregulated, susceptible to error and hacking and can be affected by discontinuation. Please ensure you are aware of the risks before investing.

Information issued in the UK by SEI Investments (Europe) Limited, 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR which is authorised and regulated by the Financial Conduct Authority.

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