Cryptocurrency is a massive, globalized phenomenon. It inspires passionate opinions, from nerdy tech bros changing their Twitter avatars to cartoon apes to the richest people in the world buying Lamborghinis with Bitcoin. Its madcap, meme-crazed online culture can make it seem frivolous and shallow, but it’s not. It’s part of a powerful ideological movement with serious implications for our economic and political future.
Despite the hype, there are still many questions about cryptocurrency. Some are technical, such as how it works and why the value of some cryptocurrencies go up and down. Others are about the social and psychological effects of cryptocurrency. For example, a 2021 Pew Research Center survey suggested that the cryptocurrency community is quite diverse in terms of demographics, with Asian, black and Latino adults more likely to own crypto than white Americans. Some argue that crypto’s properties of anonymity and censorship resistance make it particularly attractive to marginalized groups who have had their property unjustly taken from them.
If you’re looking to invest in crypto, the first step is learning a few of the basics. Cryptocurrencies are digital assets that have a value based on a “blockchain,” which is a shared, public record of transaction data. Blockchain files are stored in multiple places over the internet, making them a good way to keep records safe from hacks or human error. The best cryptocurrencies are designed to be decentralized, with wealth distributed across a network. This makes them difficult to manipulate, but it also means they can be volatile and hard for governments to regulate.
The other important thing to know is that cryptocurrencies are not yet widely accepted as a medium of exchange, or a store of value. This is because they are incredibly volatile, with prices jumping wildly in short periods of time. In addition, it can be a hassle to buy things with crypto because they often require special software or an intermediary. Finally, the current US tax code requires you to report any profits from selling or exchanging crypto for other goods and services.
It’s also worth knowing that, if you do decide to invest in crypto, you should pay attention to who is leading the project. Many reputable projects make their white papers (a document that outlines a crypto’s features and goals) publicly available, so you can learn about the project’s team and how it plans to use your tokens.
So, now that you know some of the basics, you’re probably wondering if crypto is really a fad or if it has the potential to transform our lives. The truth is that it’s too soon to tell, but there are some things you can look out for to help determine whether this is a long-term trend or a passing fad. For example, if the number of crypto-using people is growing quickly, that’s a good sign. Similarly, if cryptos are being used by people you respect, that’s another good sign. Hopefully, soon we’ll all have some answers about what the future holds for crypto.