How Do You Explain Cryptocurrency to a Beginner?
How do you explain cryptocurrency to a beginner? When you encounter people who know little or nothing about cryptocurrency for the first time, you will try to make them understand its entire concept.
Imagine going to a friend who does not have an idea of how crypto works to inform him about BULB tokens, BTC, and ETH price actions and possible investment opportunities.
You will end up not convincing them to see the opportunity from your point of view because they will think it is another basket to throw in their precious liquids (by this, I mean money).
In this piece, we will be discussing cryptocurrency as it were to be taught in an Economics class in High School.
How Do You Explain Cryptocurrency to a Beginner?
To make a novice understand what cryptocurrency is, you will have to consider taking important subtopics one after the other according to their hierarchy.
Now let us break down the complex word "Cryptocurrency" under the following:
1). What is Cryptocurrency?
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Crypto as Its participants call it, is a digital payment network or platform that removes the need for physical money when carrying out transactions.
It does not exist in physical forms like the traditional money issued by a nation's government. Everything about crypto is digital.
Fiat currencies are only produced and issued by government-approved bodies. Whereas, Crypto Currencies can be created or mined, sold, or issued by companies or groups of individuals.
In the crypto market, you can perform your trades or transactions without the supervision of government agencies.
2). How Do People Create Cryptocurrencies?
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The term used for the creation of cryptocurrencies is 'Mining'. Since crypto transactions undergo a series of validations, the mining process is needed to perform these validations and create new units of Cryptocurrencies.
Wondering how mining validates transactions? Mining does this with the help of specialized software and hardware.
To perform this process, you will need some kind of high computational power. A good amount of electrical power supply is not left out of these necessary factors for successful crypto-mining activities.
However, you should note that not all cryptocurrencies can be mined. Some of these cryptos are created by developers using a hard fork.
When these developers create a new chain in the blockchain, one fork follows the new path and the other follows the old path.
These types of cryptocurrencies can not be used for purchases but for investments whether long-term or short-term.
3). Advantages of Cryptocurrency
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The main advantage of crypto is the privacy it offers those who transact with it.
When you are buying or paying for a service with cryptocurrency, you do not need to give out your personal information.
This privacy protects your information from fraudsters and identity thefts. No matter what happens to your nation's government, your investments are considerably safe.
I do not want to say very safe because the financial market in general is full of uncertainties.
4). Types of Crypto
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Crypto exists in two types. These are:
- Tokens: These are assets that are built and kept on a blockchain. They cannot exist outside a blockchain.
- Coins: They are like traditional money in the crypto space. A digital coin has its blockchain. Note that coins can be digital, virtual, or tangible.
5). How to Get Started with Cryptocurrencies
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After explaining what crypto is, you will have to move the discussion to a close by showing them how to get started.
Now, here is how to get started with cryptocurrencies:
I). Create a Crypto Account and Fund it
To create a crypto account, you have to first select a broker or an exchange platform. (Whether centralized exchange or decentralized exchange).
For centralized exchange platforms, you will need to provide your government-issued ID for verification.
Here are some brokers or centralized platforms I recommend:
II). Buy a Cryptocurrency
After your account is set, you can proceed with buying your first crypto by clicking on the 'BUY' button.
However, you will have to note that each cryptocurrency has a symbol representing it in the crypto market.
Here are some of the cryptos and their symbols:
- Bitcoin - BTC
- Ethereum - ETH
- Dogecoin - DOGE
- Tether - USDT
- Uniswap - UNI
III). Choose a Type of Wallet
When you are ready to buy a crypto, you will be asked to provide a wallet address.
There are two types of wallets; hot wallets and cold wallets. One offers online storage and the other offers offline storage.
With all these explanations, you should be able to make a crypto novice understand how the crypto space works.
However, if you would love to share your idea on this subject matter, do so in the comment section.
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Thank you!!!
