Some brute facts about Bitcoin and other cryptos

At Expensivity, Bernard Fickser, who has explained how to sell non-fungible tokens (NFTs) now offers “The Truth About Cryptocurrencies: A Clearheaded Guide to the Crypto World.” (January 15, 2022) For your convenience, we are serializing his work, which can be read in whole here. Here’s Part 1:

Even though most people own no cryptocurrency, cryptocurrency still matters to the average person. That’s because crypto (or cryptocurrency) is transforming the world of money and finance, and everyone has a stake in that world. The average person therefore needs a basic grasp of crypto and why it is important. It’s not enough, however, simply to know about crypto. To really understand crypto, you need sound actionable information about investing in crypto and benefiting from it. This article therefore covers both the theory and practice of cryptocurrencies.

Why is crypto important? Many people who invest in crypto do so because it’s a hot topic, and they don’t want to miss out on the excitement and money to be made. Fear of missing out (FOMO) is these days a prime motivator for people getting into crypto. But better reasons exist for getting into crypto. Crypto is having a huge impact on our conception of money and its use in society. Crypto has thus become valuable for a variety of tangible reasons:

Crypto currency background with various of shiny silver and golden physical cryptocurrencies symbol coins, Bitcoin, Ethereum, Litecoin, zcash, ripple
  • Financial access for the un-banked. Many people around the world have very limited, if any, access to conventional financial services and institutions. By downloading a crypto wallet to a smart phone, anyone can start transacting in crypto and assume a place at the financial table.
  • Re-banking the de-banked. Crypto can be regarded as a form of free-speech money. People around the world are increasingly being de-banked for political speech. Political opponents can weave false narratives and pressure conventional financial institutions to deny financial services to targeted persons and organizations. Crypto bypasses financial choke points.
  • Safeguarding freedom and privacy. Crypto functions much like cash, avoiding or minimizing the role of financial intermediaries that can snoop and derail monetary transactions.
  • Displacing central banks. Citizens from countries whose central banks are having a tough time maintaining the country’s currency, whether on account of political turmoil or mismanagement, can bypass the country’s currency by using crypto. Some countries, like El Salvador, even endorse this move.
  • Funding local government. Local governments can decide to allow tax payments to be made in crypto, facilitating the collection of tax revenues. Miami has made this move.
  • Hedge against inflation. Crypto can provide a store of value when conventional currencies lose their purchasing power, especially in times of hyperinflation (this has happened with Bitcoin in Argentina and Venezuela). Unlike conventional fiat currencies, which can be “printed without limit,” cryptocurrencies typically have an upper supply limit.
  • Near frictionless transactions. Transacting funds in crypto simply means sending them electronically from one crypto wallet to another, and the computational effort to do that tends to be virtually nil. So crypto promises to make loans and financial transactions quicker, easier, and cheaper.
  • High IQ filter. To understand crypto and use it effectively requires some intellectual horsepower. STEM-phobics are at a disadvantage in the crypto world. Cities and countries that embrace crypto are likely to be magnets for smart innovative people. Embracing crypto has become an obvious way to enhance a population. Miami and El Salvador are two places currently seeking such a benefit. More will follow.
  • Money as a meme. Crypto is becoming a conduit for big ideas. The various coins convey collective attitudes, dispositions, or visions of a world where money is unleashed from conventional roles. An example is non-fungible tokens, or NFTs.

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