Currency is a figment of our collective imagination. The US Dollar – it’s just coins and pieces of paper that billions of people believe have value. The actual metal of the coin nor the paper of the bill have much, if any, value.
If currency is a figment of our collective imagination, why can’t a new currency take hold in our imagination?
Well, it’s already happening.
The top banks, leading investment firms and wealthy individuals across the world are starting to believe. The banks and firms are offering ways for their customers to invest and they, along with prominent individuals are investing in cryptocurrency themselves.
The next generation of wealth (Gen Z: birth between 1997-2015) are believers. They are the adults of tomorrow. The bank VPs. The creators of wealth. The transactors of currency.
If the banks believe. If the prominent individuals believe. If the future generation believes. What say you?
What is Cryptocurrency?
In its simplest form, it is internet money. No person, country, bank or entity owns it. Any person with an internet connection can acquire it.
Is there just one Currency?
There are over 5,000 different cryptocurrencies in the world. The most well-known is Bitcoin.
Where do I buy it?
There are 100’s of online “exchanges”, but the most notable are Coinbase, Bittrex, Binance and Gemini. Not every exchange has every coin, but they all have the most widely known coins (Bitcoin, Ethereum, etc.).
Why do people believe in Bitcoin?
Believers of Bitcoin typically focus on 3 key attributes: Decentralization, Efficiency, Trackability.
This is the biggest difference between fiat currency (like US Dollar) and Bitcoin. It means the banks don’t control it. A country doesn’t control it. The collective people do.
There’s a fixed supply. No one can print more Bitcoin.
The value of bitcoin is the same in South Africa as it is in the United States. No currency conversions needed. No boundaries to be concerned with. No middlemen doing the transaction. The coins can be transferred immediately over the internet with immediate audit-ability through the blockchain (the technology backing Bitcoin).
All transactions made with bitcoin are recorded on a public ledger (blockchain). This ledger is constantly updated and is immutable. No one can “fake” the money because the ledger would deny its existence. Anyone who cares to know can find out how many bitcoin are in “circulation” at any given time.
How Risky is Cryptocurrency?
Every investment has risks. Cryptocurrency is a healthy risk.
If your portfolio only consists of some combination of index funds, cash and your house: you’re not risking enough.
If you’re under 40, you’re really not risking enough.
The younger you are, the more time you have to bounce back from a risk gone wrong. Opportunistically, the more time you have to enjoy a risk gone right.
The collective imagination of cryptocurrency is building.
What say you?