Following my orange-pilling lecture yesterday, I got this email:
The student:
Hi Professor,
I know that we aren’t going to learn about cryptocurrency in our lessons, but I don’t know much about it and I’m a little confused and curious about it. I have a few questions down below and I’d love for you to go in detail when you get the chance!
- How long has cryptocurrency been around?
- Is it similar to stocks, in the way your investment can grow?
- You mentioned people do big transfers and pay a small fee, do you think it will eventually be regulated by the government? in the way that if a big transfer is made at a bank it’s investigated
- How does one put money on the platform?
My reply:
Hi _____,
- Bitcoin was the first "cryptocurrency", and it was created in 2008/2009.
- Bitcoin and crypto are not like stocks. Stocks are an ownership in a company, but with bitcoin/crypto you don't own a share of any company. Think of it more like a digital collectible that you can own and trade, and its value is based on what other people are willing to trade you for it.
- The regulatory environment surrounding bitcoin and crypto is still evolving. Currently, they require exchanges (places where you buy and sell crypto), to verify the identity of all their customers so that they can trace any transactions to and from those accounts.
- There are many ways to buy Bitcoin. The easiest way is to use a regulated exchange, like Coinbase. There are other more privacy-focused ways, but those require a bit more technical know-how. Happy to explain more if you'd like.
For what it's worth, I'd also draw a sharp distinction between Bitcoin and "Crypto". I can't vouch for most crypto projects, and a lot of them are dubious schemes designed to enrich their founders without providing any real use-case or value to their users. I'd put Bitcoin in a different category due to its history of true decentralization, independence, and security.
Also, this isn't financial advice, and I wouldn't affirmatively recommend any particular investment in bitcoin, crypto, or any other asset. Hope the above helps you make more informed decisions, though!
What do stackers think of my reply? I imagine I'll get dragged for recommending Coinbase, or even using Bitcoin and "Crypto" in the same sentence.
That part sounded a bit off!
Not too far off. Seashells, wampum, and gold were basically collectibles. The crucial factor which distinguishes gold from diamonds, rai stones before and after new methods of mining were introduced, Bitcoin from crypto, is the stock to flow ratio.
In another universe, I could imagine an iteration of Bitcoin being introduced by a private company experimenting with virtual tokens as a collectible trading game, and eventually taking on a life of its own. We're lucky that Satoshi gave us a more compelling history than that, but "collectible novelty" was certainly an aspect of the monetization process.
I've read about that, but I think that currently the concept of digital collectibles is more related to NFTs.
I'd argue that collectibles isn't a wrong term, but it does carry some unwanted associations to things like beanie babies and NFTs.
Sounded a bit off to me too. What should I have said instead? "Token"? I don't really like that term either.
Bitcoin is money just like USD and EUR. And it can be traded like USD/EUR pairs.
Bitcoin is a stateless money, like digital gold
Very balanced, very responsible, very academic. It's obvious from your reply that you know a tooon more, so student can go look around, learn stuff, and see whether they care enough or you're the right person to explain it.
Well done :)
Hooray, den approved response
Good job. I don't know if I would have gone with digital collectible but I think it is tough when you to both explain it and separate Bitcoin from crypto, which I think you did well.
At first I wrote "asset" but changed it because I felt that in normies minds' assets are too close to stocks, and in the financial world assets often generate yield, which Bitcoin doesn't.
Quite simple questions that you can get an answer from google or ai, if i would contact my professor, i would really a check a topic that interests me and his opinion on it would be important for me