With the whirlwind of interest generated by December’s edition of TGIF 2 Minutes covering “To Crypto Or Not To Crypto”, demand exists for at least a quarterly dedicated to the topic of cryptocurrency. For those who are already crypto experts, this volume of “Crypto Quarterly” may be elementary but a great number of experienced investors admitted limited knowledge and appreciated the information.
Continuing with the basics:**
- As of now, Bitcoin and other cryptocurrencies allow people anywhere in the world with an internet connection to make “a transfer of value” (can be compared to a transfer of money) without a bank or middleman. There are “small” transaction fees, but no expensive foreign exchange process required. This could be seen as risky, but exchanges of cryptocurrencies are real and are taking place as we speak. Whether or not this pace continues remains to be seen but is fairly likely to continue.
- By the way, in this world of cryptocurrency technology, it is said that anything that can be “digitized” can be exchanged cheaply and quickly.
- Cryptocurrencies operate on software networks. These networks exist primarily to process transactions and then to record and store the transactions, thereby “batching” them into “blocks”. Thus, the software was named “blockchain”.
- It is also said that anyone can download and run these “open source”, publicly visible software programs. Apparently, this public visibility ensures that no one on the network is counterfeiting the currency and transactions are permanent. This element is viewed as one of the “game changers” of crypto versus conventional money and government-issued currencies.
There is much more to the “birth” of cryptocurrency – which can be covered in the next “Crypto Quarterly”, if not sooner.
- Jumping quickly to the “How do I buy one?” topic. Among ways currently existing to buy, say, Bitcoin are through a crypto exchange such as Coinbase or Gemini; there are also mobile brokers including PayPal, WeBull and Robinhood.
- The first Bitcoin ETF in the US began trading in October on the NY Stock Exchange. An “into-the-weeds” fact is that the ETF does not – and cannot – invest directly in Bitcoin because Bitcoin itself is not regulated by US securities laws BUT Bitcoin FUTURES are regulated. Therefore, the Bitcoin ETF, symbol BITO, holds Bitcoin futures. Futures are typically directly correlated to the underlying security or commodity.
Heads may be spinning but in a good way. Education is power.
BUYING CRYPTOCURRENCIES IS EXTREMELY VOLATILE AND RISKY.
CRYPTO EXCHANGES, CRYPTOCURRENCIES AND THE BITCOIN ETF ARE **NOT** FDIC INSURED IN ANY WAY.
*The diagram above first appeared in a May 2019 edition of TGIF 2 Minutes to illustrate how payment methods have evolved from Cash ($, far-left) to newer and often more convenient forms such as credit cards (“CC” in the diagram above), then PayPal and Venmo (the “P” and “V”) and now digital forms such as Bitcoin (the “B”, far-right on the diagram). The world has rapidly gone digital in hundreds of ways including social and money.
**Paul Vigna, WSJ.com. Dec 2, 2021.