Cryptocurrencies have taken the financial world by storm this year. Practically everybody is talking about digital tokens.
But is it really goodbye US dollar? Not so fast. When your uncle asks if he should invest in some Bitcoin — or Floki, for that matter — you should have some answers ready.
So without further ado, here’s your one-stop shop if you want to sound like you know what you’re talking about this holiday season.
As You Pass the Mashed Potatoes
At the most basic level, cryptocurrencies represent digital money in the form of tokens represented on a digital ledger called a “blockchain.” The biggest and most widely adopted one is Bitcoin.
If You Wanna Seem Smart
Bitcoin has hit several new highs as well as lows this year, often spurred and buffeted by comments made by Tesla CEO Elon Musk, not to mention a massive crackdown on cryptocurrency mining — the energy-intensive process that creates new Bitcoins — in China and a more widespread adoption by financial institutions. Even Wall Street is getting on board now, and predicting even higher highs in the future.
Right now, as inflation keeps rising in a post-COVID world, investors are buying up cryptocurrencies in search of a new hedge. In other words, crypto could end up replacing gold for the next generation.
Alternative coins or altcoins are hot on Bitcoin’s heels, with tokens like Solana, Ripple, and Dogecoin making major gains.
But at the same time, cryptocurrencies are as volatile as ever, and investors should be wary of making the wrong move. It’s a high risk, high reward game. And even your uncle won’t be able to predict Musk’s next kneejerk reaction.
If You Wanna Be a Downer
Tell them that each cryptocurrency transaction still has a massive carbon footprint, which means that investing in cryptocurrencies is akin to buying oil and gas stock.