In recent years, the subject of cryptocurrency has grown difficult to ignore. What began as only sparse headlines back in the 2010s has grown into a more and more focal discussion as Bitcoin’s price has continued to reach soaring new records. And as a slew of competing new e-coins and currencies have sprouted up — each attempting to emulate that same success — this intangible new trade has reached a new level of prominence.
In some circles, conversation about “crypto” is harder to avoid than commiseration about the results of the 2024 election. And while you can’t expect your grandpa to grasp “the blockchain” just yet, even he’s probably had to fend himself off from a healthy share of “Doge” and Bitcoin-related propaganda by now.
There are few who truly understand cryptocurrency, and fewer still who can unpack the topic comprehensibly. Even outside the burgeoning world of meme-inspired e-coins, though, we’ve found ourselves dealing with more and more of these innovations that we struggle to make proper sense of. How the internet works is a subject I doubt I’ll ever really understand. The inner machinations of the phone in my pocket will likely always remain a mystery to me. That we ever got planes and rockets into the air is a perpetual source of amazement.
Understanding Cryptocurrency: A Basic Definition
Cryptocurrency is one of the latest and greatest examples of society’s technological conundrums. Following Trump’s election, estimates for the total amount of money invested in cryptocurrency exceed three trillion dollars. According to NBC News, as much as 21% of American adults are invested in cryptocurrency, even after a few enormous sell-off periods. And yet, it functions under a shroud of mystery.
When asked to simply define cryptocurrency, my equally inexplicable artificial intelligence companion, ChatGPT, not-so-simply-but-still-far-better-than-I-could-have, explained:
“Cryptocurrency is a digital or virtual form of money that uses cryptography (advanced encryption techniques) for security purposes. Unlike traditional currencies issued by governments, cryptocurrencies are decentralized and are not controlled by any central authority. They are stored, transferred, and managed on a digital network called the blockchain, which is a public, secure, and tamper-proof ledger.
Transactions made with cryptocurrencies are verified by a network of computers, called nodes, that use complex algorithms to confirm the transaction’s validity. Once verified, the transaction is added to the blockchain, making it nearly impossible to alter or reverse.
If you’re still struggling to understand, you’re not alone. No matter how many descriptions I read, these terms still feel nebulous at best. They hover above my head and soundly out of reach.
The Parallels Between Cryptocurrency and Stocks
But this enigmatic realm of formless currency continues to operate even if few of us can really make heads or tails of what happens within it. The science of stocks can be similarly hard to penetrate. Though anyone can enter into the stock trade, it’s not many people who can make sense of the complicated trends on those ever-changing graphs.
As with stocks, the entire domain of decentralized currencies is steeped in indecipherable terminology that seems to be purposefully designed to confuse laymen. In many regards, cryptocurrency feels more like an evolution than a shift.
The Risks and Realities of the Crypto World
This new terrain is defined by shady back channels of finance and a proliferation of 30-digit passcodes to exchanges and wallets that — ever since the Sam Bankman-Fried incident — we can’t always be confident will survive to see tomorrow.
If the collapse of FTX speaks to any of the broader trends at play within the land of cryptocurrency — which it most certainly does — then billions and billions of dollars are invested in valueless coins with names like “Putincoin,” “Shiba Inu,” and “WhopperCoin.” The market is so oversaturated with these nonsense currencies that it begins to appear that the price of admission into this world is virtually non-existent, both for buyers and sellers. People can invent a new e-coin without knowing how they operate. Even the “Hawk Tuah girl has begun proudly foraying into this digital no man’s land.
The Growing Acceptance of Cryptocurrency in Everyday Life
As jargon about “non-fungible tokens,” “chainlink,” and “the ledger,” continues to circulate, and stores like Starbucks, Burger King, Whole Foods, Microsoft, and Paypal have begun accepting Bitcoin, the world of cryptocurrency is quickly beginning to feel less foreign. Investing has become so simple anyone can do it, even while only a handful of investors can meaningfully distinguish their investments.
At worst, the cryptocurrency trade feels like a horse race in which most spectators are effectively blindfolded.
The Inherent Complexity and Confusion
What does “Swapzone,” provide? And how is it different from “SafeMoon” or “Banana Coin,” you might ask? I certainly couldn’t tell you, and I’m dubious of almost anyone who says they can.
Even the purportedly distinct functions of these shoddily-named new currencies are almost unintelligible to most people without a year or two of computer science under their belt. Hearing people attempt to describe their separate utilities is more circuitous than a Jordan Peterson dissertation and about a fifth as coherent.
A Personal Dive into the Crypto Facebook Groups
When I began tentatively exploring the possibility of this revenue stream a few years ago, I joined some Facebook groups devoted to cryptocurrency. I hoped that I could not only get some sense into where I should be investing my money, but get clearer insight into what exactly this new world was that so many people were suddenly squirreling their money into. What I’ve found instead, perhaps not unsurprisingly, is that so much of the bravado and soulless finance obsession that surrounds the world of stocks is alive and well in the cryptocurrency trade.
But where occasionally the stock traders might impart some actionable wisdom in the articles they write and the comments they contribute to these groups, cryptocurrency investors appear to be firing in the dark. The pieces written on the subject largely provide no more than spurious speculation. The entire market is volatile and people buy into it on spontaneous gambler’s urges.
People place bets on little more than whims and cool-sounding coin names and then shoot for the stars with niche memes and “Shiba to the moon” tweets. They put on their crypto expert hats when one of their investments soars inexplicably and go silent when the $1000 channeled into a cryptocurrency for dentists, called “DentaCoin,” suddenly evaporates.
I’ve yet to meet someone who can meaningfully distinguish between “DogeCoin” and “Shiba Inu,” but to hear crypto investors speak on the subject, you might be woefully misled into thinking this is more than a guessing game built on an impenetrable charade.
Does the Crypto Market Depend on a Lack of Understanding?
I think this hazy new institution may actually depend on people’s lack of understanding.
The potential of this new money-making opportunity has people conveniently looking past the fact that they can’t even follow how it operates. It’s impressive in a way. That millions of people have already jumped on the bandwagon is excuse enough for millions more to follow suit — blithely ignoring that they can’t even discern what the blockchain is to begin with. We can make even less sense of the distinction between these pseudo-currencies than most Americans can make of the antiquated language of their nation’s founding documents.
The Uncertain Future of Cryptocurrency
Whether cryptocurrency will linger into the future still remains uncertain. As the planet continues to spin in this increasingly digital direction, it wouldn’t totally shock me to see the general public paying for their groceries with Bitcoin and “Ethereum” in ten years. It’s already beginning in some places.
As odd as it sounds now, I can’t say that it’s a whole lot more odd than the Apple Pay taps that have quickly become my first resort when paying for nearly any goods or services.
Right now, the cryptocurrency industry is being spearheaded by the opportunistic capitalists of a strange new age. But government regulation will tamp down on this free-rein chaos of a market. The future of finance is unlikely to be divided between a thousand comically named e-currencies and meme coins.
But in some form or another, I think crypto is here to stay.
Leave a Reply