What is crypto?
Many people don't realize the term "crypto" refers to both digital assets and the blockchain technology they run on.
Before we dive deeper, we have to demystify the engine under the hood: the blockchain.
Think of it as a giant, digital notebook that everyone in the world has an identical copy of. Whenever a transaction happens, it’s written into everyone’s notebook at the exact same time.
Here's how it works:
- Each page in this notebook is a "block" of information.
- Once a page is full, it gets a unique digital seal (which is mathematically impossible to fake).
- Every new page links to the one before it. This creates a chain of pages or blocks.
The reason this is a game-changer is that everyone has their own copy of the truth. It's not possible for someone to just "fudge the numbers." If anyone tries this, their notebook won't match the hundreds of thousands of others online. The system, the blockchain, will reject their attempt as fake.
Even the word “crypto” comes from cryptography – the science of using mathematics to secure data, verify identity, and prove ownership.
It's the first time in history we’ve had a system where you don't have to "trust" a person or a bank – you trust the maths.
Navigating crypto can involve navigating a lot of jargon.
To make things easier, let's start by looking at the three main groups of crypto assets. Once you see how people actually use crypto, the buzzwords begin to make more sense.
- “Store of value assets” exist. These include bitcoin, which many believe will maintain its value over time and now serves a role similar to gold.
- “App-store assets” include Ethereum and Solana. Some people refer to these as “smart contracts”. We say they have “utility” as they can act like digital operating systems (such as iOS and Android) on your smartphone: Developers can launch decentralized applications on their blockchains. Example applications include financial services similar to Paypal and Revolut.
- “Stablecoins” are assets like USDC and USDT. These are digital dollars. They closely track the value of a traditional currency, such as the US dollar. This helps keep a steady value for daily transactions like paying for groceries.
This report has been prepared and issued by 21Shares AG for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however, we do not guarantee the accuracy or completeness of this report. Crypto asset trading involves a high degree of risk. The crypto asset market is new to many and unproven and may have the potential not to grow as expected.Currently, there is relatively small use of crypto assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in crypto assets. In order to participate in the trading of crypto assets, you should be capable of evaluating the merits and risks of the investment and be able to bear the economic risk of losing your entire investment.Nothing herein does or should be considered as an offer to buy or sell or solicitation to buy or invest in crypto assets or derivatives. This report is provided for information and research purposes only and should not be construed or presented as an offer or solicitation for any investment. The information provided does not constitute a prospectus or any offering and does not contain or constitute an offer to sell or solicit an offer to invest in any jurisdiction. The crypto assets or derivatives and/or any services contained or referred to herein may not be suitable for you and it is recommended that you consult an independent advisor. Nothing herein constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation. Neither 21Shares AG nor any of its affiliates accept liability for loss arising from the use of the material presented or discussed herein.Readers are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors.This report may contain or refer to material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject 21Shares AG or any of its affiliates to any registration, affiliation, approval or licensing requirement within such jurisdiction.
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