What Is Cryptocurrency and How It Makes Companies Hundreds Of Millions In Hours
Bancor, a tech startup focused on electronic currency tokens, recently made close to $150 million in three hours on Monday during their initial coin offering or ICO.
Much like an initial public offering for stock in a company, the Bancor website said the offering has raised almost 400 thousand ether, the digital currency for the Ethereum digital currency network. Over 10,000 people bought tokens and when the digital currency is converted by its "sharehodlers" it totals up to big bucks in physical money.
If the previous paragraphs threw you for a loop or sounded like a bunch of gibberish, that's OK. It is complex.
Bancor is one of many companies creating their own digital money or cryptocurrency that can be sent worldwide instantly and isn't regulated by a central bank or government. Popularly referred to as Bitcoins, from the highly successful company of the same name, these digital coins filling up digital wallets could change the face of our economy in huge ways.
Take 2 minutes and watch this short video about how cryptocurrency works:
Outside of mass decentralization removing the middle men of banks and allowing for global instant transactions, there are several perks to using cryptocurrency. There are no fixed denominations of cryptocurrency so you can send someone 0.0001 coins or 10 million if you had enough. The makers of Bitcoin ensured a fixed number of coins, in this case 22 million, so that no one can dupe other users with "copies" of money because no new coins are being produced through a mint.
Everyone using cryptocurrency has access to the "ledger" or account book so everyone can track transactions globally. Users on digital currency networks also have the added incentive of contributing their computers to the network by being given small fractions of coins for every transaction they help to verify.
There are numerous drawbacks to cryptocurrency not limitied to their limited acceptance as payment, digital wallet security, and most notably its volatile worth in relation to physical money. Regardless, this might have been the biggest public outing for cryptocurrency yet and as the markets and technology stabilize we might be seeing more digital coins in our lives as the months and years pass.
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