What Exactly Is Cryptocurrency?

Steve Ballinger, MBA
A free video tutorial from Steve Ballinger, MBA
Millionaire Investor|Stocks|Cryptocurrency|Teaching 300,000+
4.4 instructor rating • 26 courses • 306,975 students

Learn more from the full course

Cryptocurrency: Complete Bitcoin, Ethereum, Altcoins! (8 HR)

Bitcoin & Other Cryptocurrency Is Growing Fast. Master Cryptocurrency Use & Successful Investing In Bitcoin & Altcoins!

08:04:20 of on-demand video • Updated January 2018

  • Use cryptocurrency like Bitcoin and others for your personal use.
  • Choose and setup your cryptocurrency wallet to hold your digital coins.
  • Evaluate and choose an exchange that fits your trading needs.
  • Invest in cryptocurrency with confidence and apply successful strategies and techniques.
  • Build your own cryptocurrecny portfolio that matches your risk tolerance.
  • Apply Fundamental and Technical Analysis (Charting) when choosing individual coins to invest in.
English [Auto] Let's start by talking about what is cryptocurrency. I mean you can't really use it or I wouldn't advise you to use that or certainly to invest with it. If you really don't understand what it is and how it functions and why it might be a benefit to yourself and to others in society. So let's start with what is cryptocurrency Exactly. And really all the cryptocurrency is at its base level is it's money it's money it's a thing you can use to exchange for other goods and services. The thing is with it it is a virtual currency it's a digital version of money. So all the transactions are done on. There's no physical thing you can touch or hold. It's not like you have a coin or a paper dollar or paper euro or anything like that. It's all done digitally. That's all virtual. None of it is a physical type of thing. So it's a little bit different that way in the first ever really successful cryptocurrency that emerged was Bitcoin. You may have heard of Bitcoin. In fact you probably know the term Bitcoin before you may have even heard of the term cryptocurrency. So think of it this way. Cryptocurrency is the overall thing for like this type of money that could be many different things one of which is Bitcoin but there's other type of cryptocurrency is out there like a theory which is really growing and being real popular or Ripl or different types of crypto currencies out there. And bitcoin is one type of crypto currency. Think of it like money right. You have money is an overall category. And when I use that category you have different types of money or maybe different people who issue money which we will talk about we'll call fiat currency it's backed by a government you know those things are like Dollars Euros rupees yen all these things that can be bought and traded on an exchange which you can also do with cryptocurrency and learn all about that. But also that you can use to buy goods and services with cryptocurrency. It's the same exact thing. Cryptocurrency is the digital version of money and then things like Bitcoin or 3M are types of money and they're just like euros and dollars. So this sounds pretty crazy right. You have this money that's actually as well but not backed by a government it's pretty decentralized people kind of I can make it up a little bit and there's nothing that really holds it together. No paper money there's no coin's there's no standard backing behind it like gold or something like that. Under no country backing it or anything either. So this sounds like really crazy like a crazy idea and maybe in some ways it's crazy but think about other crazy ideas that have happened in the past. And one of the first crazy crazy things if we go back in history a little bit from when we were doing the barter system we were just trading exchanges of goods and services was the idea of paper money or coins or first with coins especially two. And why did paper money and coins come about. Well think about it was a way to easily transport money or gold you had gold which was very heavy to transport so you could have the equivalent of gold in a piece of paper or maybe in a small coin that would represent that gold backing it. And that would have value that you could trade for it so I'll trade you X amount of paper money in exchange for this good or service. So that was a really the kind of first crazy crazy idea but it filled a need and this is what we time. Cryptocurrency how it fills a need then think about credit cards. I mean you can imagine a way back when we say credit cards completely for granted but not you know you have paper money or coins you have this little piece of plastic this piece of plastic you say yeah just trust me you'll be OK run my credit card through and pay for my meal at this restaurant and don't worry I'm good for it I'll pay you on it or the credit card company will pay for it. So credit cards were initially seen as like this is kind of crazy. Just use cash use checks or other types of ways to write out money. This whole plastic thing that seems kind of crazy and obviously now Credit cards are well well adapt adapted. And now we've moved to next levels which we use all the time to which is electronic banking. Now you don't even now really getting virtual right on paying bills automatically out of my bank account maybe or I'm transferring money between my bank account and into some other type of thing. Maybe I'm buying good or service or maybe I'm using my bank account to transfer money to a crypto currency exchange and then bind cryptocurrency coinage on that exchange like bitcoin for example while I learn all about that too. So that seems kind of strange us electronic banking but now that's second hand to us and heck now we've got things you can use your phone right. You know I got my phone here I can use my phone and I can use that to use Apple Pay or Google pay and with. And I can go to a restaurant and when I'm going to pay I don't have to show a credit card which people are comfortable with. Now I got this whole new fangled technology of paying with my telephone. I mean how crazy is that going to pay with my telephone. And then there's also the technology that supports that. The actual technologies NFC or near field communications with your love technology near-field communications is what recognizes that my phone gets close to the scanner. It scans it and then takes the money and or you know with some money towards that restaurant so they'll end up getting paid just like on a credit card. So my point of all this is it seem like strange things like I got this virtual currency but it's actually something that's emerging a new think about possibly in the time when credit cards are brand new and how that take a long time to adapt. Or things like electronic banking how knew that was me think of your parents there like there's no way I'm going to send my money through that electronically through the bank. What's that. That's crazy. Or this now with Apple Pay and Google pay is actually more nor emerging techniques technology and certainly cryptocurrency is new. It's in a new emerging stage and that's very very exciting. But there are also a lot of risks around that too. This is setting up the whole course there's really understanding what is cryptocurrency. But I want to understand that it's not maybe as crazy as it seems. I mean it would be crazy like if I could use bitcoins or something like buy and you know buy a ticket on an airplane right. I mean I would even call it that where I could go buy an airplane ticket with cryptocurrency that seems crazy. Well yeah you can do with with peach airlines. Live Japan you can buy using bitcoins you can go and buy your ticket using bitcoins go online order through bitcoins and emerging type thing that they're offering. And this is a big part of the growth of bitcoins and growth of character currency has a lot of the adoption in the Japanese market is actually helping to fuel this hobby in the field the rise in prices and things too as it starts to legitimate legitimate of mind to legitimize even more. So I can use bitcoins a type of cryptocurrency to book an airline ticket. I wonder where these guys are final wave bye bye to them. Thanks for paying and Bitcoins So as we know there are different types of traditional or what's called fiat currency I alluded to it before where Fiat is basically currency backed by a government and we're familiar with many of the common ones either dollars pounds euros rupees been around for a long time we're comfortable with that we're even comfortable with exchanging that money. You know my changing my dollars for somebody euro certain CIM and to a pound or a rupee or something like that we're very comfortable that we have well established exchanges that do that. And by that same token we are in many different types of crypto currencies. I mention like Bitcoin which is the leader in theory them and Ripl are a couple of the names out there but there's hundreds and hundreds of cryptocurrency is out there and there are new ones being created all the time as we'll discover in the course and there are new types of exchanges that they're trading on all the time too as well. So there's a lot to it and we're going to cover all. Here on the course. But really what should take away from this section is being comfortable with it. Yes this is emerging. This is new. There is some risk around too as well especially for investing and investors are going understand all that. I understand this is filling a need and is something that is I believe is going to continue to grow and grow rapidly. I mean think about you know if you exchange goods and services in the past with barter it's like I'll give you one chicken for a glass of milk. I mean think of how hard that was to do and then money became really more like paper money and coins to help facilitate trade I'll give you two euros now for that glass of milk or whatever is a favorite for glass of milk in euros. But think about now how trading is real complex in a global economy. We do some of that with currency exchanges. I'll convert my dollars to your euros and then I will buy that milk or I'll do it on the street. So maybe before I travel to Paris or or somewhere like that I'll have in euros or Copenhagen you know I'll have my Euros you know converted. And it's there's as an exchange rate. Same thing with cryptocurrency you're doing those exchanges just instead of in using things like Euros and using dollars you're using these cryptocurrency which makes actually easier and then eliminates the middleman the sort of facilitating trade and things internationally. That's a key key focal point of this too is because it's avoiding these trust the third parties we have to think about traditional money we have third parties or middlemen that really facilitate and prove our transactions right. We've got governments who really backed the currency and banks and accountants and folks are all involved in the monetary system and you may know these are centralized parties or trusted third parties but those of the questions that come out and why cryptocurrency was born and why it's really growing is how trustworthy are these third parties do exchanges ever get hacked. Well sure. Currency manipulation happened we read about that in the news all the time where a I might be trying to raise the value of its currency or lower the value of its currency and manipulate that currency. That happens all the time. Middlemen are is that at a cost. Well sure. We know that from just general business sense that anytime you have another person or institution touching it that adds a cost along the way and adds cost to that. And so that really with looking at the centralized system there was a lot of discussion around was there a better way. And that's really where the Bitcoin and others came around and that's where cryptocurrency came from was to fill that better way a better way of going from a centralized system to one that is a decentralized system to one that is not you know based on long so many governments trying to interact. But we're people you and I as individuals can have more of a say more of an impact in what is happening with currency and with our money. So that's where a decentralized system came about and they needed us. Certainly a lot technology and things to support that. Never heard the term block chain. That's where that kind of block chain is. The decentralized system and we're going to learn about the watch chain and how that makes a difference in a peer to peer network. You can see from the image here you know there's not one central government that everything flows and then everything is going to go through that or through some of these middlemen the Washi allows you to communicate individually between me and you between me and maybe a business that I want to purchase something with I line all sorts of different things like ordering that airline ticket I can go on line order from Pietsch airlines and order that airline ticket using that cryptocurrency without having to go through any to have a middleman or type of thing of that nature. So we will learn about it but really understand that cryptocurrency is emerging. It is a growth area. There's a lot of exciting opportunities from that and we're going to learn how to use it and we to learn about how to invest in it in this course.