Even the mention of the crypto industry alone is enough to give us a headache sometimes. There are so many layers and subcultures that grasping an understanding of how the industry works can feel overwhelming. Here is a mild breakdown of the crypto industry looking at only its essential building blocks.
Investors
Unlike in the stock market, investors in the crypto industry aren’t just accredited (rich people with a ton of dough to invest). Instead, everyday people can invest into crypto businesses. However, it isn’t just everyday people that invest in crypto, entire countries like El Salvador and big companies like Tesla are also investing. It just means that everyday people have the opportunity to invest in crypto.
Wallets
Like in the real world, investors store crypto in wallets. Wallets can be defined as hot or cold. Cold wallets are hardware devices like USB ports whereas hot wallets are wallets that are connected to the internet such as apps or other computer software – Clutch and Coinbase are some popular examples of hot wallets.
Exchanges
These wallets will often connect to exchanges so that people can buy the crypto currency. Exchanges can be centralised, decentralised and marketplace exchanges. Centralised exchanges are where you are not the end custodian of your investment so that exchange is the owner of your investments as they’e now holding. Whereas decentralised exchanges never hold your investment, rather they facilitate them. Coinbase, KuKoin and Binance are examples of centralised exchanges. Uniswap, SushiSwap and Pancake Swap are examples of decentralised exchanges. NFT Marketplaces are sites like Open Sea and Rarible
Blockchains
Many protocols, tokens and dapps (decentralised apps) operate on an ethereum blockchain because it allows for smart contracts which allows for different businesses with different functions to be built. Many of the NFT collections that are booming at the moment have been built on the ethereum network. However, using a blockchain requires a few nad the more popular a type of blockchain is, the higher the fee.
Metaverse
The metaverse is a trending concept around the crypto space. It’s a future state of the internet which many are seeing as a version of AR and/or VR where we wear headsets and interact with each other in some way. Facebook launched Meta – its mother company – in October of last year. Metaverse fits into crypto in that a lot of crypto tech is going to be underpinning the metaverse such as NFT digital fashion and branding and our wallets connecting to the metaverse. Therefore, as a crypto investor you’ll be able to use your credit to invest in things within the metaverse. Major metaverse companies include Blocktopia, Meta, Sandbox, Decentraland and Gather.
