If you missed it, last week President Joe Biden signed an order urging the Federal Reserve to consider whether the central bank should create its own digital currency.
There are two types of cryptocurrency: proof of work and proof of stake.
“[Cryptocurrency] is proof of work,” said Lee Jesse, owner of Albert Lea’s Technology 9.
According to Jesse, proof of work is a hash (data passed through a formula) that constitutes currency and is accumulated by a miner (a person who does not pay for cryptocurrency). A person wanting cryptocurrency can also go through Coinbase to exchange money for digital currency. And this digital currency can then be used for investments.
“Mining is just kind of proof-of-work so you can hoard some cash,” Jesse said.
Digital currency has been around for over a decade, although he cautioned against buying from any random exchange as some are less popular.
“It’s kind of like the wild Wild West,” he said.
Jesse said that by doing this, Biden was trying to protect investors from unreliable coins.
“Crypto runs on a blockchain system,” he said. “There’s a ticker happening on the internet every few minutes during the day.”
And, according to Jesse, when you make a blockchain, you have proof of stake and buy the coins. The coins then go to a server, which accumulates more coins (money from an investment).
During these ticks, distributed systems can be built.
When using bitcoins, investors develop both a public and private hash. The public hash is used to identify where a person buys cryptocurrency or uses digital currency. The private hash goes into an investor’s wallet
Cryptocurrency is like an iteration of the internet, he said, and it’s in its infancy and compares coins to stocks. He also thinks the more press he gets — and the more money people make from him — the more mainstream he will become.
“Along with everything else, I think it takes some time for the government to come up with regulations for all of this,” he said. “I think the government is aware of that, but sometimes the government is slow to catch up with this new technology.”
Jesse said coin prices have already risen with talk of regulation, but warned that tighter regulations would mean prices would have to stand on their own as digital currency serves as a commodity. And although Coinbase is currently the largest exchange, it is not the only one.