Get to know cryptocurrencies and how they can help you manage and pay your distributed teams compliantly.

It seems like everyone is talking about “crypto,” but do you understand the “why” and “what” behind cryptocurrencies and how they function? 

This definition will help you better understand how cryptocurrencies can be helpful when working with a distributed team. 

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What is Cryptocurrency? 

Cryptocurrency is a digital or virtual currency that uses cryptography (the process of hiding or encoding information, in this case, digitally) to secure financial transactions, control the creation of new units, and verify asset transfers. 

Unlike traditional currencies issued and regulated by governments, referred to as “fiat currencies,” cryptocurrencies operate on decentralized networks based on blockchain (a shared digital database) technology. Some of the most famous crypto examples include Bitcoin, Ethereum, and Solana,  but pop-culture-based trend or novelty coins like Dogecoin have become popular in the past too. 

Some key characteristics of cryptocurrencies can include:

• ‍Decentralization: Cryptocurrencies are decentralized. This means they are not typically controlled by one single central authority, like a government or bank. Instead, cryptocurrencies run on a decentralized network of computers (nodes) to validate and record transactions on a blockchain.
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• ‍Blockchain Technology: Blockchain is the underlying technology that enables cryptocurrencies to function. It is a distributed ledger that records transactions across a given network. This technology ensures transparency and security and prevents double-spending (a common issue in digital currencies).
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• Cryptography: Cryptocurrencies use cryptographic techniques to secure transactions and control the creation of new units. This ensures the integrity and privacy of the users' financial activities.
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• ‍Supply Limits: Many cryptocurrencies have a limited supply, meaning a maximum number of coins can ever exist. For example, Bitcoin has a fixed supply of 21 million coins, which helps protect against inflation.
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• ‍Hidden Identity: Although blockchain transactions are transparent and traceable, the identities of the users involved in the transactions are often represented by “cryptographic addresses,”  not personal information, offering more privacy.
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• ‍Digitization: Cryptocurrencies are fully digital and use electronic transactions. They don’t use physical forms like coins, bills, or any other physical currency. 

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How Did Crypto Start? 

In 2009, Bitcoin was created by an anonymous person (or group, we can’t be sure) known as Satoshi Nakamoto. It was the first (and is still the most popular) cryptocurrency. Since Bitcoin, thousands of other cryptocurrencies have been developed, each with unique features and purposes.

Cryptocurrencies can be used for various purposes, such as online purchases, investments, and fundraising through Initial Coin Offerings (ICOs). There’s still debate surrounding the mass adoption of Bitcoin or other cryptocurrencies, with significant variance across different countries and industries due to regulatory and technical challenges.

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How Can Borderless Help?

Managing a remote team can be a challenge. At Borderless, we are experts in international employment. We can make sure all employees who need to be are background checked, legally compliant, and not raising any hiring red flags.  

We can help you understand the different work cultures around the world and be your safety net through your employees’ lifecycles, from the planning stage of onboarding, right through to retirement in 150+ countries. 

Book a demo today to find out how we can help.