Uh oh, did you miss the crypto boat?
Maybe you didn’t trust or believe in crypto in the early stages, but now you’ve noticed that some people have made big money with it. Meanwhile you still don’t really understand how it all works, and you feel as if the crypto ship has sailed. But has it? And is it really that important to learn about crypto?
Is it too late to start learning about crypto?
Be honest: if you had a time machine you would travel back to 2009 and buy a sh*tload of Bitcoin, wouldn’t you?
Well, you and me both.
Maybe you believe you are too late anyway to get started with crypto. With all due respect: I call BS on that.
So you weren’t an early adopter.
So you needed a little bit of time to adjust to this “new money”.
I didn’t jump on crypto either in those early days because I was sceptic, just like you. But does that mean that you missed your chance? Absolutely not.
It’s not too late to build a solid crypto portfolio on one condition: that you properly educate yourself first.
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What is crypto?
Let’s start with the very basics (and no, you shouldn’t feel stupid for hearing all of this for the first time):
what is crypto exactly?
Definition:
A cryptocurrency is a digital currency that serves as a medium of exchange through a computernetwork that is not reliant on any central authority to maintain it.
Still gibberish to you? No worries, I am going to break this down into small pieces. There are 3 elements to unpack here.
Element 1: Digital
Cryptocurrency is fully digital money, meaning it only exists online. Our “standard” money is becoming more and more digitalized as well – think about bank cards, payments through bank apps or digital wallets… – but physical money still exists. There are still occasions where you have to go to an ATM, insert your card and get some paper bank notes. With crypto, that’s not possible.
Element 2: Medium of exchange
Crypto coins are interchangeable, just like the money we know. For example: just like the Euro, every Bitcoin is worth exactly the same. You can exchange one Bitcoin for another, because one is not worth less or more that the other. That means that the coins can be used as a medium for exchange. In other words: you can buy things or trade with it.
Element 3: Computer network not reliant on any kind of centralized authority
Crypto is stored and exchanged on a computer network that is not maintained by one particular authority, such as a bank or company. In other words: crypto is decentralized. This is probably the most important characteristic of cryptocurrencies.
The network uses strong cryptography to secure the currency and all of its transactions. The goal is to make it an ultra transparent system that is safe for everybody to use.
Crypto vs. fiat currency
When you submerge yourself in the world of crypto you will at some point come across the term “fiat money” or “fiat currency“. Here’s what that means:
Definition:
Fiat money is any currency that is created and endorsed by a government. Its value depends on supply and demand, the stability of the government and the economy it is tied to.
The national currencies we all know – Euro, USD, GB pound… – are fiat money. “Fiat” is a Latin word, and it basically means “with permission“. This is where crypto sets itself apart: it is not issued and influenced by a government. It belongs to the global network and the classic rules that apply to fiat money don’t apply to crypto.
Why is it important to learn about crypto?
For as long as it has existed, the world has been constantly evolving. That’s the case for nature, humans and animals, but also for politics and the systems we use to make our lives comfortable. Crypto aims to change how we treat finance.
You could say that cryptocurrencies challenge the status quo that we have reached when it comes to money. We grew up in a world where it’s normal to let the government dictate how finance works. This new technology works in an entirely different way. It wants to make money more fair and transparent, and above all independent from governments.
Whether you agree with that or not, it will have an impact on our future in one way or another. And that’s why you should at least learn to understand how crypto works.
You’re all caught up!
Read the other parts of the crypto miniseries to become a true crypto expert.
