This is the fifth installment in an ongoing series breaking down innovations in Web3 for creators and why it matters to writers, course creators, coaches, consultants, and anyone looking to create value on the internet.
Today, I'd like to discuss a topic that you often comes up in association with Bitcoin, Web3, or the blockchain: Cryptocurrency.
My goal is that hopefully once you've read this article, you'll have a high-level grasp of the historical background of Cryptocurrency, and how it came to be (enough to sound reasonably intelligent to your peers). You'll be able to start thinking creatively about how cryptocurrency factors in to the future of online business, and building community.
So without further adieu ...
What exactly is cryptocurrency? Is it a new form of money or something else entirely?
Cryptocurrencies are digital assets that use cryptography to secure transactions and verify ownership. They’re also known as virtual currencies because they don’t exist in tangible forms such as coins or paper bills.
Cryptocurrencies are created through a complex algorithm called mining, which involves solving complicated mathematical problems. Once solved, these blocks of data are added to a public ledger called the blockchain. This makes them tamperproof and virtually impossible to counterfeit.
The first cryptocurrency, Bitcoin, was invented by Satoshi Nakamoto in 2008. It was released as open source software and has since become one of the most popular cryptocurrencies in existence. The original Bitcoin protocol was designed to limit the total number of Bitcoins that could ever be mined. As of January 2022, there were more than 18.9 million Bitcoins in circulation.
High level benefits of transacting in cryptocurrency include:
- Sending and receiving funds without a middleman such as a bank or or merchant processor like Stripe or Paypal (although both are working on cryptocurrency payment solutions).
- Sending and receiving funds while remaining relatively anonymous as long as you keep your wallet address private.
- Sending and receiving funds across international borders, anywhere in the world, and with great speed.
- Sending and receiving funds in small fractional amounts based on the currency being used.
Potential Risks and Downside of Transacting in Cryptocurrency:
- While generally lower than credit card or traditional merchant service fees, you do still have to pay fees in the form of Gas. With some forms of Crypto, like Ether, these can be quite high, while others like Solana, are very minimal.
- Cryptocurrency pricing and market value can fluctuate widely, and has a reputation for being quite volatile, which turns off some people from getting started. Stablecoins like USDC are one tool for managing this risk if you are transacting regularly in crypto.
- Because it's still a bit of "the wild west", with low regulation, the crypto landscape is full of scams that you'll want to watch out for, and phishing attempts to gain access to your personal information and wallets are common.
Why Should You Invest in Cryptocurrency?
There's no doubt that investing in cryptocurrency can be volatile, and some have likened it to being on a rollercoaster if you are thinking about your investments with a short-term outlook.
That said, if you invest wisely, there are a few valid reasons why you might want to have some cryptocurrency in your wallet. Here are a few reasons why you might consider investing in cryptocurrency:
Crypto is a good investment long-term:
In the last ten years, Bitcoin has outperformed all asset classes, including the US Nasdaq 100, large and small cap stocks, and REITS. I found this chart by Charlie Bilello helpful:
Ethereum has been growing even faster in the past five years, and while this is speculative on my part, I believe that once the 2.0 infrastructure is complete, we'll see even bigger growth in value, as it becomes easier to transact on the network without high gas fees.
I'm not an economist, but smart people tell me that Cryptocurrency is a hedge against the traditional financial system, and inflation. In 2021, the US inflation rate was roughly 7%. Because Bitcoin for example, will only ever have 21 million coins, there's some protection here, whereas a government can print more currency at any time.
Cryptocurrency in many cases has far more utility than fiat money. While it's true it can be an investment vehicle, more and more its something that is required to transact on specific technology platforms, and purchase goods and services within the growing Web3 creator economy.
Where can you buy Cryptocurrency?
The best place to buy cryptocurrency is through an exchange. For most people just getting started, Coinbase is going to be the most widely accessible and trusted option you'll want to consider.
It’s one of the largest exchanges in the world with over $1 billion worth of transactions taking place every day.
You can use Coinbase to send and receive payments online using their app or website, or via SMS. They also offer a mobile trading platform so you can trade directly on the go.
You can fund your account using bank transfer, debit card or credit card. The minimum deposit amount is $100. Sign up here.
Other Exchanges for buying crypto:
- Binance is the largest cryptocurrency exchange in the world in term of daily trading volume of crypto currencies. Their US site is now available in most states with the exception of Hawaii, Idaho, Louisiana, New York, Texas, and Vermont.
- Kraken is another popular exchange. They offer lower fees than coinbase, and over 50+ cryptocurrencies are available on the exchange for purchase. As of December 2021, Kraken is available in 48 US states and 176 different countries.
- Gemini is a new exchange that allows investors to buy bitcoin and ether. It's a New York trust company founded by Tyler and Cameron Winklevoss of Facebook fame. They currently offer 10 free withdrawals per month.
Interested in continuing to learn more about Web3 and Crypto topics that relate to running an online business as a coach, consultant, or course creator?
check out these additional links:
Looking to explore this exciting world of blockchain and Web3 in a deeper way, but not quite sure where to start?
I highly recommend joining The Invisible College. The Invisible College is a learning DAO that gives you the skills, network, and opportunities to make an impact.
The Invisible College is a school owned by the students where you can learn, build, and create in this exciting new world of Web3.
Joining this organization has been the best decision I've made this year so far for my growth and learning, and I'm excited to see how the organization evolves.
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