Cryptocurrency: the money of the future? Just the latest investment craze? A finance bro scam? What IS it and how do I find out how cryptocurrency works??
You’ve clicked the right article my friend, because we’re going to break down all the things you need to know about what crypto is, how it works, and how it differs from something like cash.
How Cryptocurrency Works
Much like MC Hammer, you can’t touch cryptocurrency.
Crypto, short for cryptocurrency, is a type of money that was founded and exists solely online. Created in 2008, crypto took the world by storm in 2020 when Covid absolutely ravaged global economies.
Currently, it’s mostly used as a type of investment, rather than an actual currency. Most likely if you go to your local bodega they aren’t going to take crypto as a form of payment.
But you can find a crypto exchange and use your dollars to buy an investment in crypto.
Crypto is decentralized currency, meaning that there is no one governing body that oversees it. That means there’s no Treasury department, no Congress, no Parliament, in charge of creating and then distributing cryptocurrency.
This makes crypto exciting and scary and weird! Good thing we made an entire video on how crypto works, what decentralization is, what blockchain technology is, and exactly HOW bad crypto is for the environment!
The Problem with Cryptocurrency
Read almost any crypto headline and your anxiety (and confusion) will shoot through the roof.
You’ll see headlines like “Crypto Skyrockets After Elon Tweets!” “Bitcoin Crashes Hard.” “New China Crackdowns Spell Trouble For Crypto Everywhere”.
I can feel the stress rising as I’m writing this! The two biggest problems that I see with crypto at the moment are that 1) not enough people understand it but want to get involved, and 2) crypto evangelists are way too aggressive about it.
With SO many promises and SUCH large claims of transformation, crypto begins to feel a bit like a snake oil. Oh, you can cure cancer and clear my skin? Seems sus.
This leads to people doubting it just on it’s face, instead of on the actual facts.
Keep Learning About crypto
Crypto is a brand new kind of money, and what happens when you first try new things? You have to work out the kinks.
Precisely *because* it’s so new, and *because* there is no one governing body, crypto works very differently from ‘regular’ money, like cash or credit cards.
That’s what makes it so crucial to understand how cryptocurrency works. You have to understand what the blockchain is before you can become a master of it.
Crypto is prime ground for scams, for theft, and for people who simply don’t know the details of it to lose money. The FTC has a handy and easy to read guide on cryptocurrency scams that I think everyone should read.
Please note: I am not saying that crypto itself is a scam. I’m saying that it’s a tool that scammers can use to scam. Just like the stock market is a tool that Bernie Madoff used to scam people out of $64.8 billion. Bernie Madoff doesn’t make the entire stock market a scam, and the crypto scammers out there don’t mean that crypto itself is fake.
That’s why we keep learning! We keep reading! We think about our personal investing goals and what strategies and tools are best to reach them!
Learning how cryptocurrency works is step one in determining if cryptocurrency is a good fit for your investment strategy.
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