Remember back in April when it seemed like literally everyone was buying that elusive thing called Dogecoin to screw over Wall Street and also make bank by getting in on cryptocurrency? But then…not everyone got rich, and some even lost, like, ev-er-y-thing?
Still, it’s not weird to be very, very intrigued by the idea of becoming a Bitcoin billionaire—even if you’re unclear on how, uh, any of it actually works. That’s why we’re here to quell your FOMO with everything you need to know.
The crypto overlord is a computer.
First, this kind of cash comes in the form of intangible digital units (aka you can’t physically touch them) often called tokens or coins. Unlike traditional paper money, they’re not issued by a central bank; kinda like traditional paper money, there are lots of different currencies out there, says Primavera De Filippi, a faculty associate at the Berkman Klein Center for Internet and Society at Harvard University.
In some cases, there’s a set, limited amount of a cryptocurrency in circulation (for example, there will only ever be 21 million Bitcoins in the world). In other cases, like with Ethereum, there’s no max on how many coins can be created by a currency’s “bank.” Almost all crypto exchanges use their own version of something called blockchain software, which records who’s buying and who’s selling in a super-hard-to-hack way.
Here are some of the biggest names in crypto rn:
BITCOIN: The most famous kind has been around for 13 years; its price (at press time, $47,637 for one Bitcoin) is so high bc of its limited supply.
ETHEREUM: Founded in 2013, its blockchain works faster than Bitcoin’s, so you can use it to buy non-fungible tokens, or NFTs, like digital art. One coin = roughly $3,584.
CARDANO: At just $2.43 per coin, this one claims to have the most energy-efficient blockchain in the game.
You cannot use crypto like IRL money.
I’m going to bet 30 Dogecoins that your local coffee shop does not accept crypto. But even if you did try to pay for your PSL with digital currency, it could take up to an hour to go through because the computers using blockchain have to work really effing hard to process payments, according to financial expert Humphrey Yang (follow @HumphreyTalks ASAP, trust). Oh, and you’d have to pay not-cheap processing fees. As newer forms of cryptocurrencies and updates to existing ones roll out, you might start to see speedier transaction times.
You should think of it as an investment.
Like people who buy stock in buzzy new companies, many crypto investors snap up coins to (hopefully) make money over the (very) long term. The rewards could be major, but—but!—take note: Crypto is “extremely volatile,” says De Filippi, mostly because its value isn’t based on anything, well, real. At least, not “real” in the way stock values are based on how IRL businesses perform. A cryptocurrency’s value is based solely on what people are willing to pay for it, in the hopes it’ll become huge.
So basically, don’t invest any money that you’re not prepared to lose, says Yang. If you *do* have enough cash to take the risk, apps like Venmo, Cash App, and Robinhood let you buy crypto on their platforms. Once you do, forget about it. Seriously. Don’t touch those coins for at least 5 to 10 years. “The longer you hold it, the better chance it has of doing well,” says Yang. Partly because most investments work like that and partly because experts think the crypto world will stabilize (read: become more valuable) over time.
It’s also fine to just chill for now.
Listen, if you can swing it, buying coins isn’t a terrible idea (assuming you follow the rules on this page). But if it all seems way too adventurous for your bank account right now, you don’t have to get stuck in that FOMO spiral. Even seasoned financial advisers aren’t sure what the future of crypto could look like—it’s all still pretty much the Wild West out there. If, instead, you want a solid, safer way to invest your cashola, put it into a 401(k) or other type of retirement savings, and you’ll be just fine.
Collage by Adam Hale, The Daily Splice
Jessica Goodman is the New York Times bestselling author of young adult thrillers They Wish they Were Us, They’ll Never Catch Us, and The Counselors. She is the former op-ed editor at Cosmopolitan magazine, and was part of the 2017 team that won a National Magazine Award in personal service. She has also held editorial positions at Entertainment Weekly and HuffPost, and her work has been published in outlets like Glamour, Condé Nast Traveler, Elle, and Marie Claire.
