The opinions expressed in this article are the writer’s own and do not reflect the views of Her Campus.
I have never understood or cared for any type of stocks or cryptocurrency my entire life until this year. The world of trading, interest, equity, and other big fancy financial terms had little to no meaning to me. All I cared about was if there was enough money in my debit card to go buy that iced coffee I had been thinking about for weeks. It wasn’t until I got in a relationship with a guy who really LOVES cryptocurrency and the stock market that I started to learn more about it. But, as a radical leftist feminist, if a man tried to explain anything to me related to money (a topic that women get made fun of for not knowing enough of) I immediately thought he was mansplaining. Once I put my guns down, I realized the world of cryptocurrency is much larger than I thought but also not that hard to understand. It is also something that I think everyone should have some knowledge of, especially women so we can break the stereotype that women aren’t responsible for money and don’t know how money works. So here is the simple breakdown of cryptocurrency that is not mansplained.
What is Cryptocurrency?
Cryptocurrency, in the most basic terms, is literally digital money. It exists solely on a computer. You can not print cryptocurrency and it is not manufactured as a tangible item (like at a mint). Cryptocurrency does not need banks or a government. A famous example of cryptocurrency is Bitcoin, the first original cryptocurrency that launched in 2009. The other famous cryptocurrency is Dogecoin, a coin created as a joke based on the meme of Doge, the famous Shibu Inu that became a meme in 2013.
What makes Cryptocurrency different from our currency now?
There are two major differences between cryptocurrency and the dollar bills in your wallet. The first one is that cryptocurrency is extremely transparent. Bitcoin explains this; “All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent.” When you begin your cryptocurrency journey, you have a digital wallet. You create your own unique address (like a string of numbers) that is specific to you. It doesn’t include your name or address as debit cards do. Once these addresses are used, anyone can see the history of transactions and balances. This privacy is another desirable aspect of cryptocurrency because you don’t have to share your identity with each purchase and transaction, only your wallet address.
The second major difference is that the price of crypto fluctuates almost on a daily basis. The U.S dollar inflates but not as dramatically as cryptocurrency prices that rise and drop like stocks. The process starts by creating an account at popular cryptocurrency websites like Coinbase where you put money in your account and now you are eligible to buy any type of cryptocurrency. Then, “you can simply enter the amount in dollars you want to trade for Bitcoin, and buy at the current rate (after accounting for any fees).” For example, you could buy one Bitcoin (or a portion) for $30,000. Then you decide to hold onto it and not spend it or trade and then one day you see Bitcoin is now worth $60,000. If you sell your Bitcoin at $60,000, you have just made $30,000. That’s how cryptocurrency is different from any other currency. You can sell it for more money and make a profit off it like how the stock market works.
Advantages and disadvantages of owning cryptocurrency
Cryptocurrency has been widely celebrated in recent years throughout the media and even by celebrities like Elon Musk on SNL. But like any large investment, there are advantages and disadvantages. One advantage is that transactions are simple. There are low fees, it is private, and it is almost instant since it is all done digitally. There is no waiting for it to show up in your account as if you were to deposit a check. The second advantage is the security within each transaction. “The privacy of your financial history protects you from the threat of account or identity theft which is greater under the traditional system.” Lastly, and probably my favorite part of cryptocurrency, is that you are the sole owner of your cryptocurrency. Any money you put in the bank is managed and run by that bank. But with cryptocurrency, you are in charge of it and it remains in your wallet at all times and is not run by large institutions.
Although owning Dogecoin or Bitcoin may sound appealing, it can have its drawbacks. Since this currency lives solely on the computer, if your hard drive crashes or a virus disrupts the data, all that cryptocurrency is lost and there is no way to recover it. Another disadvantage is that although the cryptocurrency is such a girl boss for not being owned by the government, it is not regulated by the Financial Conduct Authority (FCA), so there are no rules in place to protect your business. Lastly, since it is so new to the market, not many stores or businesses take cryptocurrency as a way of payment. Unfortunately, you cannot walk into a Starbucks and buy a peppermint mocha for 50 Dogecoins. Hopefully, as cryptocurrencies grow and become more available, we can start using them for our everyday purchases.
The Bottom Line
The world of cryptocurrency is a large one, with a million different terms and ideas. It combines the already complex idea of money and now the complexity of technology. However, its popularity has taken over and has even caused people to become millionaires just by selling it. It is risky just like purchasing stocks but can have high rewards if you are patient enough to hold on to it. If you are considering purchasing cryptocurrency, make sure to do your research and put in money that you are okay with losing. It is a complicated world and it’s okay to know nothing or to know the basics. But now you know the most simple summary that isn’t mansplained by your business major boyfriend.
Here are different websites to explore when wanting to purchase cryptocurrency.
Here is another article to help explain cryptocurrency.