Crypto is all over the news. Whether it’s for someone becoming a millionaire overnight or losing their entire net worth in an hour, crypto is known for its speculative value. But it’s more than a coin.

It’s the key to running the next phase of the internet.

Without blockchain-based money, you won’t be able to access Web3 or its game-changing applications. The first foundation of Web3 is the blockchain, but crypto is the second. Crypto will change how we do many things in life from purchasing to playing games to listening to music. This means it’s likely to have the same substantial changes the dot-com boom had on all of us.

But to take advantage, you need to know how it works. Let’s start with the basics.

The Basics: What Is Crypto Anyway and How Does It Work?

Crypto is short for cryptography, which might be even more confusing, so we’ll explain. Cryptography is a method to protect information and communication through codes and encryption. Cryptocurrencies are encrypted coins that can function as virtual, encrypted currencies.

These virtual coins only function on their own native blockchain, i.e., Ether (ETH) on Ethereum. These crypto coins are then used as a currency or to help operate applications on their corresponding blockchain.

To send and use crypto, you need a “wallet” and its associated keys. A crypto wallet allows you to store crypto and use it like a currency. To use the encrypted wallet, you use a public key, which is the address for your wallet and is publicly available on the blockchain, and a private key that acts as a password to send crypto out of the wallet.

If you want to dive deeper in how this works, you can read about asymmetric cryptography.

That’s the basics of crypto without getting too technical. Now let’s go into its main uses.

Crypto Is Fungible and Has Seamless Currency Exchanges

Crypto’s fundamental assets are its ability to be used for Web3 applications, services, contracts, and as a currency.

Let’s start by explaining fungibility. An asset is fungible when it can be traded for another version of itself. For example, you could trade $1 with a friend for another $1, and both bills would be the same value. So, USD is fungible.

However, crypto is even more fungible than standard currencies.

If you split a $20 bill in half, that does not make it a $10 bill. Splitting a $20 bill gives you a worthless $20 bill. Crypto is unique because they are fungible down to decimal points. And you can buy or give someone small fractions of crypto and complete your transactions.

If you choose, you could own a fifth or even less of a bitcoin, for example. That doesn’t sound too important, till you realize the alternative is sending a $25,000 coin for a $10 purchase!

Guaranteeing some standard value across the crypto network allows those coins to be used on exchanges, which is why fungibility is essential. Exchanges can split a coin into smaller pieces, allowing crypto to be used effectively across both the digital world and real-world economies seamlessly.

This means large sums of money can easily be sent to other countries without a bank or company.

Using crypto to send money is just one use. Its main utility in the future will likely be found in its ability to act as an “underwriter” with contracts and the applications they empower on the blockchain.

Crypto can give underwriting services through smart contracts where the payor is guaranteed a product or service in exchange for the money.

So, to truly understand the power of crypto and how it will impact Web3, you need to know about blockchain apps called Dapps.

Crypto’s Utility in Action: Decentralized Applications

Crypto gives access to decentralized financial (or DeFi) resources. This pool of decentralized resources allowed for the creation of new applications and services called Dapps. Decentralized applications provide users with significant value in three main ways.

First, Dapps are private, as users don’t need to give any real-world identifying information to use the app. Second, they can always be used because they have zero downtime. If the blockchain is running, Dapps can run on any node inside the chain.

The third and most crucial advantage to users is that Dapps are decentralized, which means there is no one authority over the application. For example, Twitter could kick users off of Twitter. A Dapps Twitter equivalent could not eliminate users with the power of a single controlling person or entity, so it’s resistant to censorship.

Decentralization could have prevented what happened in China recently.

Chinese citizens deposited their money into a bank, which is a simple, benign transaction. The problem came when depositors tried to get their money out and were denied. The problem ballooned until it came to a head when depositors attempted to protest outside the bank.

To use public transit and grocery stores in China, you need a health code app on your phone to be green, meaning you are not a threat to spread Covid in the community. If your digital code is red, you cannot use public transit and other services.

The local city abused these health codes to prevent depositors from protesting by turning their health codes red, guaranteeing they couldn’t get access to the bank. This move effectively silenced a significant number of protestors.

Chinese citizens could use crypto and Dapps to guarantee their assets could not be frozen by banks or other entities in the future, allowing them to conduct business safely.

Crypto Empowers Users

Crypto will be the key to Web3, and people worldwide can use it to participate in the next phase of the internet. So, crypto will be helpful for everyone, whether they’re significant companies, individuals, or citizens under authoritative regimes.

If you want to learn how to use crypto and leverage it to your advantage, come listen to the experts at the Wynn Las Vegas. We’re hosting the W3BX expo where you can communicate with like-minded people, listen to the best, and position yourself as a trailblazer in the industry.