Cryptocurrency 101 - What You Need to Know

By Jason Winter, CSB President

Cryptocurrency has been making headlines for years, but for many, it remains a mysterious and complex topic. I believe in empowering our customers with financial knowledge, so let's break cryptocurrency down to its basics and explore what it is in terms everyone can understand.

Cryptocurrency is a form of digital money that operates outside the rules of traditional banks or government systems. That one sentence alone is scary. However, crypto is powered by blockchain technology. Blockchain is basically a tamper-proof digital ledger that records transactions across a network of computers. Imagine a digital version of a public notepad that everyone can see and agree on. In this notepad, each crypto transaction is a note added to a page, and once everyone in the group agrees the note is correct, the page is sealed and locked in place with a unique stamp (the block). Each new page is connected to the previous one (the chain), creating a secure and unchangeable book of records that everyone can trust. Bitcoin is the most well-known of all the cryptocurrencies, but there are literally thousands of others.

So, why all the buzz? Supporters of cryptocurrency highlight its potential for fast transactions, lower fees, and global accessibility. However, there are also challenges to consider. Cryptocurrencies can be highly volatile, meaning their value can rise or fall dramatically in a short period. They also lack the protections offered by traditional banking systems, making them risky for everyday consumers.

Out on the edge of Carver County, cryptocurrency may not yet feel like a part of everyday life. However, as digital payment methods become more widespread, understanding cryptocurrency helps us prepare for a future where digital transactions play a larger role. Staying informed is always a good financial strategy.

Now, what does this have to do with everyday banking? While crypto is a hot topic, the broader trend is clear: our financial lives are becoming increasingly digital. This is where tools like digital wallets come in. Apple Pay, Google Wallet, and Samsung Pay are examples of digital wallets that can help bridge the gap between traditional banking and emerging technologies.

Digital wallets provide a safe, secure, and convenient way to manage your money electronically. Unlike cryptocurrencies, digital wallets are backed by trusted financial institutions—like Citizens State Bank. They're safe and secure in that they use encryption and tokenization to protect your information. To put it simply, this means your card details are never directly shared with merchants, reducing the risk of fraud or theft. This is especially important for online transactions. They're convenient in that they allow you to store payment information on your smartphone or device, making it easy to pay in stores, online, or even transfer funds to family and friends.

As the world of finance continues to evolve, digital wallets have become a practical, accessible first step toward navigating the digital financial landscape. In fact, there's a good chance you have one of the digital wallet apps listed above already installed on your phone. Stop by Citizens State Bank today or give us a call to learn more about how digital wallets can work for you. Together, we'll keep your financial future secure and convenient.