There are definitely crypto connoisseurs out there—they make themselves known, especially on social media—but this article isn’t for them. Many of us aren’t totally new to crypto; we grasp the basic idea, but if asked to explain it in detail, we’d retreat into the nearest turtle shell.
If that describes you, read on.
What…is it?
Cryptocurrency is a kind of money. Think of it like Chuck E. Cheese tickets—you can “buy” certain things with them, but only some things, and only when you’re at Chuck E. Cheese.
With crypto, you can only use your “currency” to pay for products whose vendors have decided to accept it. For a while, that group was a pretty small Chuck E. Cheese (one of those BS ones with no ball pit), but recently the list of merchants willing to accept crypto has expanded to include Home Depot, Microsoft, and maybe Tesla, depending on how a certain E. Musk is feeling on that particular day.
OK, but what…is it?
If you were to look at an individual cryptocurrency token, it wouldn’t look like money to you. That’s because crypto is virtual, not physical, meaning a token IRL looks like a very long and inscrutable string of numbers and letters. That baffling string refers to a bunch of transactions that took place on the blockchain.
(Blockchain = a public ledger, or list, that encodes transactions in ways that are unalterable and completely decentralized—no government oversight necessary.)
How much is crypto worth?
A ton, plus a whole lot. In April, the category topped $2 trillion for the first time, and as of this writing it’s hovering around there again. Bitcoin alone is currently valued at more than $875 billion, or about $46,552 per token.
If you can’t buy much stuff with it, why is so much money parked in it?
Cryptos are more popular as an investment than as a currency. As the concept gains momentum and mainstream acceptance, lots of folks don’t want to miss the boat. But crypto is also famously volatile—partly because it’s somewhat unregulated, which makes it vulnerable to speculation.
Because governments haven’t figured out how to regulate crypto—it is decentralized, after all—the price careens whenever a policymaker decides to announce that regulation is on the way. That’s why a Dockers-wearing, old-school financial adviser might tell you to just not go there…but @btcboi38 will tell you to definitely go there.
One other thing to know about crypto as an investment is that it’s produced in limited amounts; for example, there will be a maximum of 21 million bitcoins ever, no more, no less. That’s very different from fiat currencies—aka the dollars in your wallet and checking account—which are managed by governments according to the country’s economic needs.
Who’s in charge?
No one. That’s why you can’t get three minutes into a conversation with a crypto bro without hearing the word “decentralized.” Even the name of bitcoin founder Satoshi Nakamoto is widely believed to be a pseudonym.
By definition, cryptos aren’t issued by an organizing authority (there are a few exceptions, but that’s another article). That’s why governments aren’t sure what to do with them…and why criminals like them.
How do you buy crypto?
There are lots of forums online where you can buy and sell cryptos, from exchanges like Coinbase and Binance to brokers like Robinhood and SoFi. Exchanges are generally cheaper, but they have complicated interfaces. Brokers are less complicated, but they might charge higher fees, or might end up selling your info.
You’ll have to deposit some funds, of course, and there’s usually a rigorous validation process to stave off fraud, but then you can add some laser eyes to your Twitter photo and get to HODLing.
Bottom line: Don’t feel stupid if cryptocurrency seems daunting and/or confusing. If you want to get involved, just do a lot of reading so you understand what you’re getting into.