Once dismissed as a fad of tech nerds, cryptocurrency is now in the hands of millions. It has generated huge new fortunes at a speed unseen before and, even if it crashes, is likely to leave its mark for decades. But those gains are often highly concentrated, and the vast majority of crypto wealth belongs to a small group of people. And it is a form of money that is still very new, with many unanswered questions.
One of the most pressing is what kind of people are into it. It’s easy to assume that crypto is all “White Supremacists and nerds” (to quote a recent episode of “Curb Your Enthusiasm”) but the truth is more nuanced than that. Since crypto can be bought and sold without using a name or bank account, it has made it attractive to those who want to avoid traditional financial systems and fees, including criminals, tax evaders, and people buying and selling illicit goods. It has also become a way for dissidents in authoritarian countries to raise funds and skirt government sanctions. And it is a popular choice for white supremacists because of its anonymity and censorship-resistance properties, although it should be pointed out that these same features make crypto attractive to all sorts of people who prefer to avoid the mainstream.
Another important issue is that cryptocurrencies are very energy-intensive, especially blockchains, which are databases used to record transactions. Some, such as Bitcoin, use as much electricity as 100 refrigerators. But proponents argue that these costs will diminish over time and that the benefits of decentralization outweigh them.
Then there’s the price volatility, which can be wild and scary for anyone who has invested in a cryptocurrency. Finally, it is important to note that cryptocurrencies are not federally regulated in the United States and that the vast majority of them are traded on private, unlicensed exchanges. The Securities and Exchange Commission may eventually come down on these exchanges if they violate regulations, but that is unlikely to happen in the near future.
Crypto can be a great investment for those who understand its risks and can stomach its volatility, but only if they do their homework first. Reading independent articles and researching the currencies themselves is the best way to get a solid grasp on how they work, what they’re worth, and where they’re going.
Even if you never invest in cryptocurrencies, understanding them is an essential part of being a well-rounded global citizen. Just as knowing a bit about New Age mysticism or psychedelics can help you navigate the beliefs and attitudes of today’s youth culture, knowing a little about crypto can help you feel more grounded when reading headlines like “Elon Musk Spends $200,000 on NFTs of His Own Dog.” So read up! And, if you decide to invest, diversify. And, for God’s sake, don’t buy a Lamborghini with your cryptocurrency profits. You will regret it. Trust us on this.