Why cryptocurrencies in five minutes

While cryptocurrencies are mostly seen as speculative assets or get rich quick schemes, they have valuable properties and other valuable use cases. For example:

• Excellent monetary properties

  Cryptocurrencies have better monetary properties than anything else in history. In contrast to the fiat money we use today, cryptocurrencies have a limited supply and compared to gold, cryptocurrencies are much more portable, are easier to divide into small parts, and cannot be counterfeit.

  At first glance, this may seem insignificant, but money affects everything and even small improvements can have a massive effect.

• Cheaper payments

  Merchants have to pay a 1–4% fee for every credit card transaction, while cryptocurrency transactions only come with a small fixed fee.

• Irreversible digital transactions

  You receive money in under an hour, and after that the money is yours. In contrast, it may take days to receive other digital payments that can also be reversed weeks or months later.

  Thus merchants don’t have to worry about having a purchase reversed, which usually means they have to swallow the loss.

• For anyone and anything

  Cryptocurrencies can be used by anyone. It’s for businesses who cannot accept credit cards, for people without a bank account, and people in dysfunctional countries. You can use it for truly uncensorable donations, and you don’t have to worry that your payment processor or bank will freeze your account.

  Nobody can prevent you from sending or receiving cryptocurrencies.

• Financial privacy

  Banks, credit card companies, and payment processors have all your financial transactions on record. Cryptocurrencies allow you to reclaim some of your privacy as they work like a swiss bank account in your pocket.

• An alternative financial system

  The traditional financial system rewards behavior that caused the 2008 financial crisis and relies on being able to predict the unpredictable. Cryptocurrencies represent an alternative without a central authority that can manipulate the money supply, and they can be used to truly separate money from state.

• Extensions

  You can build applications on top of cryptocurrencies, such as provably fair gambling or a timestamping service based on mathematics instead of social proof.

Of course cryptocurrencies don’t perfectly solve everything, and there are many difficulties—both technical and social—that need to be resolved. As with all new technology, they will be associated with positive and negative change.

If you want to learn more and see more examples, just continue reading. You can also jump to whatever chapter interests you—they’re supposed to be self-contained.