When Toon heard about bitcoin years ago, he quickly became a real maximalist. He believes that bitcoin can change the economy and therefore the world in a positive way. In his spare time, Toon immerses himself in macroeconomics.
Cryptocurrencies are a digital currency that uses cryptography. The first and by far best known crypto is bitcoin, and there are now thousands of coins.
Nowadays, it seems like everyone has cryptos – from your neighbor to the hairdresser around the corner. But what exactly is it? And what can you do with it? Time to dive in!
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Cryptocurrencies are digital coins that use cryptography. Many of these coins have their own blockchain.
A blockchain sounds complicated, but the principle is simple. It is a digital ledger in which you can find all transactions and balances of users. All information is stored chronologically in blocks. Those blocks are cryptographically connected to each other.
How does that work? Compare a blockchain with a freight train. A block in the blockchain contains a wagon of information. Do you want to change information from an older block? Then you have to disconnect the entire train.
Most cryptos are decentralized to a greater or lesser extent. This means that everyone can participate, and that no one is in charge. Take bitcoin. Anyone may process, monitor, receive and send transactions.
That is a big difference with the money you are used to, such as the euro. There, the European Central Bank prints the money and commercial banks monitor and process the transactions. Cryptos give that power back to the individual.
2. What types of cryptos exist?
Bitcoin is the very first crypto, but coins come in all shapes and sizes. There are now thousands of cryptos, each with its own focus and function. Nevertheless, you can divide most cryptos into categories. What should you think about?
Bitcoin started as a decentralized alternative to money such as the euro and the dollar. This crypto is used as a means of payment, or to store digital value. There are also plenty of other cryptos that focus on payments. Think of Litecoin, Ripple and Dash.
In addition to payments, cryptos can also have other functions. The Ethereum team has the ambitious goal of building a world computer on the blockchain. Instead of money, applications should become decentralized. A different focus!
Other examples of cryptos that focus on decentralized applications (dApps) are Cardano and Solana.
Due to the popularity of cryptos, it is sometimes busier on the blockchain than a concert of the Snollebollekes. Transactions that go from left to right put a lot of pressure on the Ethereum blockchain. That is why there are also crypto projects that relieve other cryptos. An example of this is Polygon (formerly Matic).
Another solution is to split a blockchain into multiple side blockchains. This is what Polkadot does. An additional advantage: each side chain can be adjusted as desired!
The metaverse is a collective term for digital worlds in which you can walk around and talk to others. Crypto can play an important role in this. With cryptos, you buy and sell digital pieces of land or accessories. Well-known examples of metaverse coins are Decentraland, The Sandbox and Axie Infinity.
If you’re interested in cryptos, you’ve probably heard of NFTs. These are tokens that represent a unique object. That can literally be anything – you can’t think of it as crazy, or there is an NFT of it.
Works of art, football pictures or even houses: anything can be an NFT. With this unique token you can prove that you own these objects. This is recorded on a blockchain, for example that of Ethereum.
Popular crypto projects that do something with NFTs include Enjin Coin and Origin Protocol.
A bit of an odd duck in the bite are stablecoins. These are coins with a value linked to a traditional currency, think of the euro or the dollar.
Traders use stablecoins, among other things, to trade faster. Here’s the thing: suppose you’re trading on a crypto exchange and you’re expecting a decline. Then you can sell your cryptos for stablecoins and hold them on the exchange. Has the bottom been reached? Then you use your stablecoins again to buy cryptos.
Well-known examples of stablecoins are Tether (USDT) and USDC. Both are worth as much as the dollar. Are you using crypto app BLOX? The euros in your locker are just real euros. But of course you can also use it very quickly if you see a beautiful moment!
The demand for crypto is growing, and that requires customized products. Do you want to trade, borrow or lend cryptos, and you do not have confidence in a third party? Then you can do this decentralized, from person to person. Decentralized Finance (DeFi) is the collective name for projects that offer these types of services.
Popular DeFi coins include Uniswap, SushiSwap, Aave and Synthetix Network.
Owning cryptocurrency is simple! Download the handy all-in-one app BLOX, and you can get started in three simple steps. Within 1 minute, and already from 1 euro.
How does it work in short?
Do you want to be able to deposit more than 250 euros? Then we ask you to confirm your identity. This can be done by sending a photo of your identity card, driver’s license or passport. We do this to comply with Dutch legislation. Don’t worry, we handle your data with the utmost care.
💡 Tip: You don’t have to buy a whole coin. At BLOX you start from as little as 1 euro!
4. What should you pay attention to when you start with crypto?
You now know the basics, but how do you get started with cryptocurrency? Below we give you some general tips. Are they coming!
More information? Then read our tips for beginners.
5. What can you do with cryptos?
The short answer: a lot. Of course, this also differs per cryptocurrency. Below we give you some general use cases of crypto.
You can use cryptocurrency to pay for products and services. The best-known example of this is Thuisbezorgd. They have been accepting bitcoin as a means of payment for years. And in fact, almost every restaurant in the Netherlands is connected. Secretly, you can indirectly pay with bitcoin at many restaurants!
Do you want to pay with cryptocurrency in other places in the Netherlands? Then you have to search carefully. Fortunately, there are more and more locations where you can go with your crypto coins.
In addition to paying, you can also trade in cryptos. You can compare that with the stock market. By buying or selling at the right times, you try to get as much profit as possible.
This is also how it works with cryptocurrencies. For example, do you see bitcoin falling, but ethereum rising? Then you exchange your bitcoin for euros and buy ethereum for it. And if the crypto market is in a dip, you can also exchange your cryptos for euros.
With the handy crypto app BLOX you can trade at lightning speed. With a small disclaimer: the market is young and very mobile. Therefore, only invest what you are willing to lose and always do your own research.
With cryptos you can – if you trade well – achieve nice returns. But did you know that you can also save with it? For example, the value of bitcoin continues to rise in the long term. More and more investors are therefore buying cryptos to hold on to them for a long time. That generally yields more than your savings account.
Due to inflation, your euros are worth less and less every year, even though that may not be noticed so quickly. By saving in cryptocurrencies you can maintain or increase the value of your savings. That is not financial advice, because you can also lose money with cryptocurrency. Here too, the following applies: read carefully before you invest.
6. Which cryptos invest?