Nothing I write here should be considered financial advice. Financial advice is an individual pursuit. It’s best to consult your own financial adviser to better understand how you should invest your money.
When in the film The Graduate Dustin Hoffman crossed one of his father’s friends in a hallway at his college graduation party, the man whispered in his ear the word plastics. It was a portrayal of the 1960’s. In today’s parties, many older adults will hear from their younger relatives all about cryptocurrencies.
Exactly as plastics broke into the scene in the 50’s and 60’s to disrupt the established patterns of manufacturing around the world and billion-dollar fortunes were created seemingly overnight, today cryptocurrencies revolutionize the way future generations will transact business and the manner in which industries will settle for payment. The remarkable difference is the reversal of the flow of information, which instead of filtering down from experienced adults to the young neophyte, today it’s the young person who offers enlightenment with advances in technology, filtering up to their adult parents, grandparents and other family members all about the revolutionary concept.
Exactly what is a cryptocurrency?
Cryptocurrency is computer-generated money, with Bitcoin as its most widely recognized version. Bitcoin was started with a White Paper, a short, nine-page publication, attributed to an individual by the name of Satoshi Nakamoto in 2008. To read it, click here.
For non-technical readers, in the exact words of Satoshi Nakamoto, Bitcoin is “a peer to peer electronic cash payment to be sent from one party to another without going through a financial institution.”
Bitcoin is, according to Andreas Antonopoulos, one the most eloquent and better recognized spokespersons of the technology, “a system of money that is not controlled by any entity, that is completely decentralized.” The concept of Bitcoin is revolutionary. It catapults our society “from institution-based money to network-based money; [it’s] the first completely global, completely borderless, completely decentralized, and completely open form of money, one where you can build applications because this money is programmable, and you don’t need anyone’s permission to launch an application any more than you need to ask permission to launch an application on the internet, and the only requirement to have a successful application on the internet of money is two interested participants–the market segment–and you have an application, and a million applications will flourish.” He continues, “Bitcoin and block-chain technology unifies the systems of money. What the internet of money does is it creates a single network, which can do a micro-transaction or a giga-transaction in seconds, anywhere in the world for any participants without permission.” “Banks are competing with a technology that enables exponential growth, exponential innovation without permission by anyone in the world.”
How do we learn more and more about this? We do it with extensive reading from sources on the internet. Personally, I find YouTube a valuable asset. It provides hours of information from some very knowledgeable individuals and some not so well-informed. Sifting through the data is essential.
If you have money lying around that you want to speculate with, funds that will never threaten your financial stability, think of the future and of cryptocurrencies.
So where do we go to start experimenting by placing money at risk?
I went to an exchange called Coinbase. It allows the transfer of US Dollars, or fiat, to the exchange. It’s a time-consuming process, often taking multiple days for the currency to make its way to your account, but it allows for credit card purchases and bank ACH transfers, making it more practical than the more expensive wire transfers from your bank account to your account at the exchange.
Your best option is to learn while slowly making decisions on what to buy and how to send holdings to different wallets, away from the centralized exchange. Exchanges are often hacked. With the hacking people lose all their holdings. There’s no way to recover them. Wallets is the topic of another blog.
Questions and comments are always addressed. Feel free to share your thoughts. Until my next blog, thanks for your interest.