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Why Should You Educate Yourself on Cryptocurrency


18th Feb 2019 Managing your Money

Cryptocurrency is often mentioned in the same sentence as the dark web. It all sounds so mysterious. Unfathomable secrets that only the most proficient hackers can understand.

Cryptocurrency is not one of those things. Despite the secretive name, it is a thriving industry that is changing the future of finances and banking. 

If you think your grandparents are out of touch when asked to use a chip reader on a bank card, then you probably know how they feel when asked for your thoughts on cryptocurrency, although you may not recognise that it's the same quandary!

But wrapping your mind around cryptocurrency is just as vital as accepting that you can swipe a chip on your card and pay for your groceries.

Confusing as it may seem, it is still just money. There are plenty of good companies, like Luno, that help people comprehend and invest in cryptocurrencies. Understanding the cryptocurrency concepts and applications today is like learning how to write a paper cheque and balance your chequebook was in the 20th century.


What Cryptocurrencies Are Out There

With as many as 1600 different cryptocurrency options to choose from, and more coming online all the time, you can begin to see how significant they have become.


1. Bitcoin

Perhaps the most famous CC in the world, Bitcoin, encompasses about two hundred billion dollars worth of assets. That is almost twice what the nearest competition brings to the digital financial table.


2. Ethereum

Where Bitcoin is pure money, Ethereum, or Ether, is what is known as a ledger technology. The value of Ether is backed by the ability to use it for technology building.


3. Ripple

Ripple has also gone beyond cash. Though Ripple has its own coin as well, it actually runs a payment processing network designed to reduce or remove fees associated with moving monies around digitally.


4. Everything Else

Boasting names like Cardano and Stellar among a substantial collection of others, it would take quite a list to outline every CC currently in circulation. It is perhaps better to simply work on an overall understanding of how they work. Memorising the names is a different issue.



What is it Worth

How much money is cryptocurrency worth is an interesting question with a unique answer. Unlike the era when a coin was worth the going rate for the material it was made from, the value of money is a changing topic in itself. If you know a bit about exchange rates then you'll begin to grasp the issue.

One of the most important differences between the fluctuation of digital money like Bitcoin, Etherium and other cryptocurrency is that the apparent reason for the value changes is very different.

Physical money like the Punds, Dollars, Euros and Yen are backed by countries and the wealth and influence they bring to bear. Changes in market value of money follows the trends of the countries that print and mint it.

The market value of CC seems to follow a different trend. The popularity of the currency in the media affects the desirability. The more people hear about it, the more they want it. The more people want it, the more it is worth.

Unlike a pound, there is no physical gold in a treasury to create worth standing behind the money. That may seem a bit odd, but keep in mind that many countries no longer have the gold to back up their currency. Understanding blockchains and what gives value to cryptocurrency is one of the many reasons to get educated on the topic.

What Can I Do With Cryptocurrency

Some businesses are on the forefront of technology and accept CC, just as others still deal in cash only. Currency is money. Cryptocurrency is also money. The concept is as simple as the applications are complex.


1. Save it For a Rainy Day - As wild as the fluctuations in the value of CC is, maybe just holding on to it for a later date is your best strategy. It all depends on what you want to get out of it, and a dash of luck.


2. Invest - Once you're all the way up to speed on what CCs are and how they work, the risks and advantages of using them etc, you might choose to invest and start converting some of your cash to the digital platform.


3. Spend - The purpose of money is to be a placeholder which you can exchange for goods and services in lieu of trading for your own labor directly. In short, money exists to be spent.


How Do I Get My Hands on It

Technically you can't put your hands on cryptocurrency in it's original form, but they do have a few ATMs for Bitcoin specifically. Looking into how that works is part of learning about cryptocurrency. When you're ready and you understand enough about the risks and rewards of owning and using this unique kind of digital cash, there are only a couple of ways to get it.


You can mine it. This isn't done with a pickaxe and a gold pan but rather with a computer. You essentially become an employee of the currency company by using your computer to verify and post information about the transactions that have happened using digital currency. You fact check. Do this long enough and it will earn you a small piece of the crypto-pie.


Accepting CC as payment for work is another way to get it. If you can find employers who want to pay using it then you're on your way. Alternatively, if you run a business then you can set yourself up to accept CC. The only other way to get CC is to pay for it. This works like an exchange anywhere else. Your money gets traded for digital equivalent amounts based on the current market value.


Final Thoughts

Someone famous once said that a little bit of knowledge is dangerous. Running right out to jump on the digital currency train without any knowledge or research isnt wise - it takes time to learn anything new.

Hopefully, shining some light on what you may not have seen before can help whet your appetite for learning. A healthy dose of curiosity will lead you to a world of information. If you follow that path, you will undoubtedly be more financially savvy when you reach the end.