We decoded what you need to know
It’s not weird at all to be very intrigued by the idea of becoming a Bitcoin billionaire – even if you’re unclear on how, er, any of it actually works. It is confusing. But as it’s also not going away any time soon, here’s the lowdown on everything crypto.
The crypto overlord is a computer.
First, this kind of cash comes in the form of intangible digital units (aka you can’t physically touch them) often called tokens or coins. Unlike traditional paper money, they’re not issued by a central bank. But kind of like traditional paper money, there are lots of different currencies out there, says Primavera De Filippi, a faculty associate at the Berkman Klein Center for Internet and Society at Harvard University. In some cases, there’s a set, limited amount of a cryptocurrency in circulation (for example, there will only ever be 21 million bitcoins). In other cases, such as Ethereum, there’s no max on how many coins can be created by a currency’s ‘bank’. Almost all crypto exchanges use their own version of something called blockchain software, which records who’s buying and who’s selling in a super-hardto-hack way.
You can’t use it like IRL money.
I’m going to bet five bitcoins that your local coffee shop does not accept crypto. But even if you did try to pay for your soya flat white with digital currency, it could take up to an hour to go through because the computers using blockchain have to work really effing hard to process payments, according to financial expert Humphrey Yang. Oh, and you’d have to pay not-cheap processing fees, too. As newer forms of cryptocurrencies and updates to existing ones roll out, you might start to see speedier transaction times.
Once you’ve bought it, leave it alone.
Like people who buy stock in buzzy new companies, many crypto investors snap up coins to (hopefully) make money over the (very) long term. The rewards could be major, but – but! – take note: crypto is ‘extremely volatile’, says De Filippi, mostly because its value isn’t based on anything, well, real. At least, not ‘real’ in the way stock values are based on how IRL businesses perform. The value of a cryptocurrency is based solely on what people are willing to pay for it, in the hopes it’ll become huge. So basically, don’t invest any money that you’re not prepared to lose, says Yang. If you do have enough cash to take the risk, you can use trading apps such as Coinbase or Kraken. Once you do, forget about it. Seriously. Don’t touch those coins for at least five to 10 years. ‘The longer you hold it, the better chance it has of doing well,’ says Yang. Partly because most investments work like that but also because exper
