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Over the past few months cryptocurrency has gained a lot of publicity, whether it be by the fact that crypto miners have been buying up all the new graphics cards making them inaccessible to gamers, if it is by the fact that a handful of people have become millionaires by proclaiming Elon Musk as their lord and savior and throwing their entire stimulus check into DOGE, or it may just be because our economy and financial system seem to be falling apart there are plenty of reasons for people to begin to be interested in an alternative system. It has now become important for us to become educated on this topic so that we may be able to make decisions on whether or not to invest in this system.
Over the past year or two I have slowly accumulated a bit of knowledge on this topic although I do not claim to be an expert. In fact I've been a skeptic of crypto for a long time and I have never directly invested in any form of cryptocurrency. I have however accumulated small amounts of LBC and BAT through my use of Odysee and Brave and I have recently set up a Monero wallet so that I can start accepting donations in that form. I have yet to be completely cured of my skepticism but as I learn more about it and as I watch the world seem to get worse I get more and more convinced that seriously getting into cryptocurrency may be a good idea, but that is of course a decision that we all must come to ourselves after we have educated ourselves on the topic. I plan to tell you what I know so that you can start that education process.
Blockchain is one of those words that gets thrown around a lot but it very rarely defined, to really understand what the big deal is with cryptocurrency it is important to understand what a blockchain is. To oversimplify it at first a blockchain is a data structure quite similar to the basic linked list data structure. In programming a linked list is made up of individual nodes which contain a piece of data and the address of the next node in the list (called a pointer), searching for items in a linked list is quite slow since each node must be visited individually and in order to progress through it. I guess it can be compared to an episode of Blue's Clues where each clue there gives you information regarding whatever you are trying to figure out that episode and information regarding the location of the next clue.
Blockchains have the same basic functionality as a linked list but they accomplish it in a much more secure and inefficient way. Unlike nodes in a linked list, blocks in a blockchain contain three things, a piece of data, a hash which is based off of that data, and the hash of th previous block on the chain. Hashes are another relatively basic computer science concept. A hashing algorithm takes in a piece of data and assigns a hash to it (usually a number). For example if we were to take my first name and plug it into a simple hashing algorithm which generated a hash by assigning each letter a number between 1 and 26 then adding them up we would get the number 31 as our hash. Hashes are generally used to make things easy to search for but blockchains use them in a different manner. Blockchains use hashes as a security mechanism, if a piece of data is changed on a particular block its hash will change and will no longer match the hash stored on its adjacent block so it will be clear that that the data on that block had been tampered with. Once a piece within a block in a blockchain it cannot be altered or deleted.
Interestingly the idea of a blockchain came about in 1991 but it was not until the emergence of Bitcoin in 2009 when anyone actually realized a use for it. When all transactions of a currency are stored on a blockchain it is impossible for any of that currency to be forged or stolen, making a blockchain based currency (which all cryptocurrencies are) more secure than any other form of exchange in history.
Another vital part of what makes most cryptocurrencies superior to traditional forms of currency is the fact that they are not governed by a single entity. After the first world war the German government foolishly thought that it could solve its problems by printing money but instead this only caused inflation to the point where it was more economical for a family to burn money for warmth than it was to them to use an entire stack of it to buy a loaf of bread, this same thing has happened in dozens of countries since then Venezuela being among the most recent. Unfortunately not everyone has been very good at learning from history, not even America seeing that a quarter of all dollars printed in US history were printed in 2020. If governments are going to keep making these same mistakes we cannot trust them to look over something as important as our means of exchange.
Anyone can download the full blockchain of any good cryptocurreny and work to verify it and many thousands (possibly millions) of people around the globe already have. In most cases this is what crypto mining is, the repeated verification of the blockchain, in order to ensure security the hashes for cryptocurrency blockchains are deliberately hard to calculate, this is why beefy hardware is a requirement for mining.
Of course because anyone can download a currency's blockchain anyone can also edit it and if they are careful with it they can do it in such a way that it wouldn't be noticeable if you are only looking at that version of the blockchain. This would make this version of the blockchain different from others and when two blockchains are in conflict they must be compared to see which of the two is correct, this this comparison is judged through a process (in most cases) is judged through a process known as proof of work which will basically just give priority to whichever version of the blockchain has been mined on the most.
Now I am aware that I am no expert on this topic, I know the workings of a blockchain quite well but when it comes to achieving decentralization no two coins are completely alike, for example some use proof of stake rather than proof of work and then there is chia which is a whole different thing and there is probably something in here that I got wrong that will cause some nerd to send me an email nitpicking all the things I got wrong. Unless you plan on developing a cryptocurrency it is not as important for us to understand how different coins achieve decentralization as it is for us to understand how blockchains ensure security.
With a centralized currency like the US Dollar, if the government were to send you a check of $1400 then you would have no way of knowing weather or not it was printed yesterday, with a decentralized blockchain based currency you can be sure that whatever money is sent to you is real.
The main reason that crypto has become popular is that several currencies have been going to the moon lately. If I had a time machine I'd certainly go back a year and tell myself to dump everything I could into DOGE or something stupid like that, I'd be rolling in money right now had I done that back then, but as it is with all investments of that nature we can't see into the future and juggling money back and forth between different currencies is akin to gambling just like putting it on the stock market is. In most cases it is safer than throwing your money into a slot machine but just like a slot machine you're not guaranteed to get your money back.
The value of anything is really only what someone else is willing to give you for it. Sure you could claim that your 1996 Ford Ranger with faded paint is worth $3000 and you may see others with the same price tag, but it is not worth $3000 if nobody actually buys it from you for $3000. The day when nobody is willing to give you money in exchange for your Bitcoin then it is worthless. The day when you will no longer be able to buy a loaf of bread without a backpack full of $100 bills the dollar is worthless. The day when gold is only viewed as a shiny rock is the day that it is worthless.
All forms of money have the potential to become worthless. We all need money in some form if we are going to be able to provide for our needs, but as we seek to get money we must seek to also understand the root of money so that we will know how to meet our needs when money fails. If you plan to get into cryptocurrency I hope you do it because you are investing in the technology and truly believe in the future that it could provide rather than to make a quick buck.
There are hundreds of different coins and currencies that one can chose to invest in but there is really only one that matters because it is the only one actually usable as a currency and the only one that is actually being used as a currency and El Salvador got it wrong because it's not Bitcoin, it's not Etherium either, and it certainly isn't DOGE. Monero is the only one that matters because it is the only one that is actually private.
This statement comes at a surprise to many people, maybe they thought the term crypto in cryptocurrency meant that it was encrypted, or maybe they remember that for years Bitcoin was only used by criminals buying drugs on the dark web, but in reality (and as we've already discussed) every Bitcoin transaction is stored on the blockchain and can be viewed by anyone, the same is true of every other currency save Monero and a few others. Monero is the only coin which we should even consider using because of it's inbuilt privacy through the use of ring signatures and because of its lack of large transaction fees which plague other coins. I won't go too in depth on it (you can look here if that is what you want) but I'll briefly elaborate on these two points.
Many people today have willingly forfeited their privacy to a number of companies and governments and have been completely desensitized to the loss of their privacy. This is not the time and place for me to convince them to undo that I am here today to make sure they don't make their situation worse.
Imagine a world where everyone could see everyone else's transactions, there is no end to the terrible things that could happen:
Yes we already live in a world where so much of what we do is being tracked, but for the most part that data is inaccessible to the general public, the world would be a much worse place if a non-private currency like Bitcoin was adopted. There are of course ways to use Bitcoin privately but most people will not put in the work to go this route and will stick with the default settings on life. With Monero privacy is the default option so the world will not be put into this kind of danger.
Transaction fees are things that most normal people rarely have a reason to think about until they get into crypto but transaction fees have been around us our whole lives. If you run a business and accept debit and credit card payments then you'll already know that about 3% of the money in those transactions are taken by whatever company is processing your payments (and you should also know that it is illegal to try and compensate for this in any way) because it takes resources to process transactions.
The same is true of processing cryptocurrency transactions except rather than being a fee taken out of the money the person at the receiving end of the transaction gets it is a fee placed on top of the spender and this fee is not based off of how much money is being processed rather it is based off of how much data is being put onto the blockchain by the transaction which relatively constant for any amount of money being spent. (In most cases the money in these fees are how crypto-miners get paid) Because of the way the Bitcoin, Etherium, and many other blockchains are built and managed, it often costs $10 just to spend $5 and because of this many people believe that these currencies are not suitable for transactions under $1000. Monero's blockchain is managed in a way that makes transaction fees this large unnecessary.
The people who actually use cryptocurrency as a currency use Monero, a lot of people will have large amounts saved up in other coins like Bitcion and Etherium since these coins do hold value, but when they want to spend it they either convert it into cash or Monero because their developers have failed at making their currency actually usable as a currency, these now act more like stocks than anything else.
The biggest mistake that people make when getting into crypto is not generating their own wallet and instead relying on crypto exchange services like Binance, or worse a stock exchange service like Robinhood which won't even let you spend your currency as a currency. Of course crypto exchange services are necessary for purchasing crypto and exchanging it with other forms of it but you shouldn't use them for any other purpose since you don't really have complete control over that wallet. Remember how Robinhood prevented users from buying Game Stop stock back in January? Crypto exchange services have the potential to do the same sort of thing with your money, you should minimize the amount of time your money spends within these kinds of wallets. (Plus if you are using Monero these services completely contradict the whole idea of a private coin)
Generate your own wallets on your own hardware for all different currencies that you plan on holding, this is a quite simple thing to do, here is a video on how to generate a Monero wallet and making wallets for other types of cryptocurrencies follow a similarly simple process, just make sure you understand what you are doing and that your computer hasn't been compromised while you do it.
As I mentioned at the beginning of this article I've been skeptical of cryptocurrency for a long time. If you had missed that part and read the rest of this that statement may have come as a surprise since I seemed to write this from the point of view of someone more excited about this topic, and maybe that's true I may not yet be willing to admit that my opinion on crypto has changed but regardless of my or your opinion is it is important for us to know about crypto and for us to hear some arguments against it.
My main concern when it comes to the adoption of crypto is that it signals the abolishment of cash. Cash is the currency of the poor, and when I say this I'm not talking about the poor as in families on welfare, I'm talking about people with nowhere to sleep but the street and I'm talking about people who live in countries where children have to hold on to their pencils because their parents can't afford to buy them a new one and go home to have only rice to eat for dinner. Because of their extreme poverty these people barely contribute to the global economy but this does not discount them from being people. Adopting Monero over traditional currency might benefit you and me but I'm not sure how such a thing would affect these people. Of course it is important to remember that these are among the most versatile people on the planet, and at the end of the day we all have to try to do what is best for us, but it is still something worth thinking about.
Of course Boomers are another issue, these are people who could definitely benefit from using crypto but they would refuse to learn. None of my grandparents ever learned how to use a credit card (I have to swipe or insert it for them when I'm with them) and none of them can bother to remember a good password. Of course these things are not unique to my grandparents, remember Donald Trump's Twitter password was "MAGA2020!" while he was the President of the United States. And when we look at the average age of America's congress (as well as the governing bodies of many other countries) we see that a lot of powerful people fall into the demographic of people who barely know how to use an iPhone.
Then of course there is the question regarding power outages. We've seen over the past year or so that even the great state of California, whose economy is larger than that of all but a handful of countries, struggles to keep the lights on, and in states like Texas which provide the majority of the country with oil, the grid is not built to withstand all types of weather. How can a currency reliant on electricity function when electricity is hard to find? And what about internet access? I've lived in cities that didn't have internet, and I'm not talking about the 90s because I'm not old enough to remember that. Cryptocurrency is undoubtably more secure than cash but it is not as versatile.
Of course these sorts of situations are ones where figuring out how to spend money may not be as important as saving it, we have to have our priorities straight especially in these times as do those of us to whom crypto may not be accessible have to all the time. The future may prove me a fool for being a crypto skeptic for as long as I have been and it seems like subconsciously I'm no skeptic at all. With the current state of the economy I'd probably be throwing some money into crypto if I had the money to do it, the people who are doing that right now aren't doing it because they anticipate the value crypto to go up, but rather the dollar to go down. But of course these are all decisions for you to make, I'm just here to help you learn what you need to learn to make those decisions and to point you to the things that you need to consider more.