After hearing about it for months on end, this week I decided to learn more about cryptocurrency and wanted to share my experience so far. So, If you were ever looking for a perhaps criminally under-educated, how-to-make-a-quick-buck-driven guide into the mysterious and ever-evolving world of cryptocurrencies, here it is.
First, let us start with the basics. We have to understand a bit more about the first known version of cryptocurrency, Bitcoin, which began this whole phenomenon before we get into any of its recent elements or what it means to trade crypto. Bitcoin was invented in 2009 by someone named Satoshi Nakamoto (nobody knows who Satoshi is. It was the name of the author on the original paper that described what Bitcoin was, but no records have been found of a living person by that name). The main point of crypto, and what Bitcoin set out to do, is that it is a purely decentralized form of transacting money. There are no banks that control where funds come from and where they go and it is entirely internet-based. This means that transactions are peer-to-peer, no intermediary that would normally take a portion of the money, as well as quicker payments. Not to mention how secure it is, which is seriously intricate and hard to wrap your head around.
If you are looking for the nitty-gritty on how this process works, I found some Youtube videos to be pretty helpful (though pretty boring honestly) and there are hundreds of other resources and articles that can help inform as well. Linked below is the best video I found. It’s never a bad idea to understand more about where you’re putting time and money.
As you’re considering if crypto is right for you, I think that there are a couple of questions that might help you understand the benefits of this as a form of making some extra moolah.
The current culture of crypto: what are meme stocks and what is a “pump and dump”?
Meme stocks. In January of this year, GameStop suddenly sky-rocketed in value out of almost nowhere. Well, that was because it was meme stock. What this essentially means, is that a bunch of people on social media collectively decide that they want to shoot up the price of a certain stock, so they all buy it together and drive the price up to astronomical heights. “To the moon” was the expression that the WallstreetBets Redditors accurately used when they did the GameStock pump and dump. This same thing is happening in the world of cryptocurrency as well. One of the more recent instances of this is DogeCoin, which was started originally as a joke earlier this year. Since then after a pump from social media and multiple tweets from Elon Musk, it’s seen growth of around 4,500% and is now worth a whopping $0.318! That doesn’t seem like much, but for those that bought early, that 4,500% increase was enormous–bringing profits into the millions for some lucky investors. With just a touch of good fortune and some time spent on the Reddit forums, some people have been able to capitalize on its randomness and make a huge amount of cash in no time flat.
Why is crypto so interesting for young people to get into?
Well, I think it all boils down to the simple nature of being in high school or college. You may be able to get a job, but are only limited to working on the weekends or when your schedule, full of classes, homework, sports allows. That’s really why so many turn to small “hustles” that can make them a quick buck. I remember in middle school I wanted to buy myself a new basketball, so I bought 3 4-packs of Supreme branded Hanes t-shirts and sold them off to my classmates for a profit. In retrospect, it was terribly sleazy and certainly a bit embarrassing, but after only a week I had enough money to buy what I wanted. Oftentimes young people are not looking to build out a portfolio of long-term investments because they want to see results now. I think that crypto has become a newly accessible way for people, especially those who are younger, to make quick money.
How can crypto generate fast-acting results than other types of investing?
It’s hard to pinpoint one specific reason why it does, but one major component is that it is extremely volatile. Often crypto stocks will fluctuate by huge margins over a short period. That becomes especially apparent when you go compare it to the stock market, which of course is, and has been for many years, the leading form of investment. Because of this unpredictability, a couple of things happen, which then drive the
a) Those that know what they’re doing with investing don’t have a significant advantage. Because investors can’t rely on using fundamentals–the basis of a company, like profitability, revenue, assets, liabilities, and growth potential–to inform their investment decisions, it creates an even more random playing field that somewhat equalizes everyone’s chances at scoring big.
b) It’s essentially a form of gambling. Putting money into cryptocurrency is more comparable to putting coins into a slot machine than it is to invest in real companies that you believe in.
This is a somewhat backward way to think of investing money, that it’s a gamble, but for those that don’t have massive amounts of experience in the stock market and who are solely looking at making money and not interested in the process of helping businesses grow, gambling doesn’t seem that absurd. It has been super interesting to learn about this space and I’d recommend that anyone who’s intrigued spend some time getting to know how it works for themselves. For people who are looking for a speedy payday, the new crypto waves seem like just a thing to jump on…and it might just be right for you.
Youtube video: https://www.youtube.com/watch?v=bBC-nXj3Ng4
Photo from Yahoo Finance