Crypto Curious? Here are some easy steps to get started (Part 2)
I get a lot of questions about crypto. What's a "wallet"? Is crypto a Ponzi scheme? How do you know what coins to buy?
Maybe you're crypto curious too, but just don't know where to get started.
I thought I'd answer some of the most frequently asked questions to help those that want to start out in crypto dive in with confidence.
Believe me, if I can do it so can you.
Part 2.
TL;DR (too long; didn't read)
You may think you're late to Bitcoin but you're not - you don't need to own a whole Bitcoin for it to provide you value. There are more resources to help you get further down the crypto rabbit hole.
Q: I want to buy BTC but it's too expensive - am I too late?
(NOTE: I started writing this when Bitcoin was at $45k. A few days later the crypto market dropped double digits and it's now significantly lower/cheaper. Calibrate accordingly when you're reading this.)
I don't think you are.??Many people look at the $45k (as of this writing) for one BTC and think that's too expensive for any one thing asset.?But that's not the right way to think about Bitcoin.
You don't need to own one whole BTC for it to be useful to you. Just like you don't need to own a $10,000 bill for dollars to be useful to you.
$45k or whatever a Bitcoin is trading at when you're reading this, is just the exchange rate of one BTC to $USD. That rate will fluctuate wildly - sometimes double digit percentages in one day.
There's a smaller unit of a Bitcoin called a “satoshi” (like dollars are broken down into cents).
100 million satoshis will always equal one Bitcoin.??That ratio never changes. Just like 100 pennies always equal one dollar.?
So if you had $10,000 to invest in something, you might be hesitant to invest in BTC because you would only be able to afford a small fraction of one BTC. That feels bad.
But in that same transaction, you're also trading $10,000 for 22,000,000 satoshi. You're a satoshi multi-millionaire. If one day a few satoshis can buy you an expensive latte at a coffee shop, this was a very wise investment.
In either case, you should look at BTC as a store of value. Like stocks or mutual funds, you hope that if you buy BTC today, it will be worth (much) more in the future and your overall buying power will go up.
There are two possible ways to realize your BTC gains if you have them:
1) sell your BTC on an exchange for more $USD than you used to buy it, and transfer those dollars back to your bank account to use.
2) use BTC or satoshis to pay for goods/services directly from your crypto wallet. There's still a lot that needs to be developed for this to be convenient, but there are a few promising projects out there like the lightning network.
So to summarize - if you think BTC is a good store of value and likely to increase in price - you should think about investing in it like you would any other asset class, regardless of how much one BTC costs today in $USD.
And keep in mind there will only be 21 Million BTC ever in circulation (it is capped by design). So unlike the US dollar or other sovereign currencies, a central bank can't just print more BTC. That makes it (hypothetically) inflation proof and current estimates are that only a small percentage of institutional investors have entered into BTC investing.
There are some very interesting supply and demand economics that will be in play once large institutional FOMO kicks in around the world.
Q: I want to learn more - what are the best resources?
Listen to podcasts. The top four on my playlist are: The Pomp Podcast , Unchained, Bankless and The Defiant. Bonus great episode - Tim Ferriss' interview with Vitalik Buterin
If you're a visual learner (which you are because you're a human), you should watch YouTube videos on the more complicated topics. 3Blue1Brown has easily the best Bitcoin explanation video I've seen. And I enjoy Lex Friedman's in-depth interviews. He does a great job with everything blockchain related.
A plug for MIT's OpenCourseWare where you can find some of the most brilliant minds explaining things - like former MIT lecturer turned SEC Chairman Gary Gensler explaining Smart Contracts
Coinbase Earn and RabbitHole will actually pay you to learn about crypto and actually do some related tasks.
Beyond that, I'd recommend you do a search for videos and podcasts on: blockchain, cryptography and hashing, DAOs, NFTs, DeFi and dApps, There are more examples out there than I can possibly list.
I hope this was helpful. If so, please let me know as a small token of encouragement.?Or, if this wasn’t helpful, shoot me a note and let me know what I screwed up.?
Part 3 coming soon