How to Explain Crypto to the Curious
Inevitably... someone in your life, at some point in time, has asked you about cryptocurrency. Even if you've been involved in the space for less than 30 days, people take notice and become curious about what you're doing, wondering if they can or should jump down the rabbit hole themselves.
The reason many don't enter the space is because it's unfamiliar, causing a mental gap between what they know and what they are yet to learn about. They know about the fiat money system, at least to some extent, but the whole crypto world is too foreign so it's safer to just avoid it completely.
Still, some are curious and will ask simple questions such as, “Tell me about that crypto thing you're in to”, or, “What does Bitcoin do exactly that real money can't do?” These and many others are fitting questions for those on the outside peering in since they don't have a seat at the table yet.
The following is a summarized blueprint that, when followed, will cause the curious people in your life to feel more enlightened regarding the complex topic of cryptocurrency while hopefully keeping their eyes from glazing over.
For starters, the setting has to be right. Think about it this way for a moment. You're getting ready for a date with a man or woman that you like. Would you take them to McDonald's? Of course not. You would at least take them to Wendy's, right? No but seriously, you would probably take them to a nice sit down restaurant with real servers and real meat being cooked in the kitchen.
Discussing crypto with a curious person shouldn't be done on a whim or while multitasking 2 or 3 tasks at once. It is best discussed over coffee at a quaint coffee shop with zero distractions. Crypto is a complex topic that deserves the utmost attention or you might as well not bring it up at all.
Let your friend or family member know ahead of time that you are not a financial advisor. Even though many have heard the phrase a thousand times on YouTube videos and also on Twitter posts, it is best to not let the curious people in your life consider crypto education as official financial advice.
Nothing is guaranteed in this world, and investments are no different. Investing in cryptocurrency is not for the faint of heart. It is a nascent market with a lot of speculation driving the current prices. If they decide to invest, suggest they only invest what they are willing to lose, ensuring that if everything went to zero tomorrow they would not be hurting financially.
The History of Money
A great way to help your crypto curious one grasp the big picture is to give them a quick overview on the history of money and how it has transitioned through multiple forms over the years.
**Barter system > Gold and Silver > Paper dollars > Credit cards > PayPal / Venmo > Cryptocurrency**
Many people in today's society only realize the value in fiat currency, which is money created and distributed by a country's government. What we have seen with the birth of the internet is a new way to transact value between parties without an intermediary such PayPal or even without a checking account.
Money has evolved over the centuries and is now almost completely digital. Most do not carry cash on them any more and instead carry a credit or debit card because it's easier to handle. Not to mention that paper cash is quite dirty and could be host to a multitude of bacteria that could further the spread of disease.
Cryptocurrency was born on the internet, for the internet. An alternative form of currency that works independently of any central authority. The problem with the traditional forms of money is that it wasn't made to fit in with the technology used today such as cell phones, computers, and IOT devices.
Furthermore, fiat currency is experiencing hyperinflation due to excessive printing with no hard assets to back it up such as gold or silver. Explaining the history of money will cause your curious person, the one that you are enjoying a hot (or cold) cup of coffee with, to see the financial landscape from a bird's eye view.
Explaining this concept should take no longer than 10 minutes.
Once you are done discussing the history of money, bring them down from the bird's eye view and transition into talking about the different asset classes that exist and have existed for hundreds of years.
Asset classes such as:
Stocks > Bonds > Real Estate > Commodities > Futures > Cryptocurrencies (newest)
The above asset classes are non-correlated, meaning that when one class goes up in value, another could go down within the same timeframe. Financial advisors will often suggest investing in multiple different classes to help diversify your portfolio.
As of early 2009, an increasingly popular asset class called cryptocurrencies strolled into town, considered to be the newest, non-correlated asset class since bonds were fashioned in the 1600's. The market cap for this asset class, at the time of this article, is valued at over $200B.
Explaining this concept should also take no longer than 10 minutes.
Honestly, I would stop there. That is, unless they are hungry to learn more. If they are mentally exhausted by this point, or if their eyes are starting to wander, then don't even bother. There is no need to dive into the technical aspects of blockchain technology... Save that for another lesson if there happens to be one.
While you both finish up your coffee or beverage of choice, perhaps bring up different ways that cryptocurrency has added value to your life and how you see the industry playing out in the future. Perhaps discuss personal goals or dreams that you want to achieve in your crypto journey and why they are important to you. ✦
Stay thirsty my friends.
If they happen to ask how cryptocurrency works, then tell them this...
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