Cryptocurrency

Taking a closer look at the new money

Making cents of it all

Fellow idiots,

Crypto might be one of the most widely-talked about parts of Web 3.0 and for good reason—as an investment, crypto has been the highest performing asset class for over a decade now. 

But it's so much more than that.

Crypto is fundamentally changing how we think about, use, create, and spend money. Below, we'll dive into how.

Affectionately yours,

Idiot in Chief 

So what is crypto?

Cryptocurrency (or "crypto") is a digital currency that is secured by cryptography, which is where it gets its name.

Most cryptocurrencies are decentralized networks based on the blockchain. Blockchain technology is basically is a very, very good ledger which means that cryptocurrencies are nearly impossible to counterfeit or double-spend. 

And much like traditional finance has dozens of currencies—US dollar (USD) · Euro (EUR) · Japanese yen (JPY) · Pound sterling (GBP) · Australian dollar (AUD)—the same is true for crypto.

There's more than one crypto?

Yes—there are thousands. 

Coin Market Cap, a great resource to see crypto exchange rates, currently has 7500+ different cryptocurrencies listed. 

Cryptocurrencies you should know

Bitcoin (BTC)

The first cryptocurrency and undeniably the best-performing investment asset of the past decade

Ethereum (ETH)

Ethereum's blockchain was built to support smart contracts, and ETH is now the #2 most valuable crypto

USD Coin (USDC)

A digital stablecoin on multiple chains pegged to the US dollar. Each USDC is always redeemable for $1

Dogecoin (DGE)

Originally created as a joke then heavily hyped by Elon Musk in what some view as a pump-and-dump scheme

What can I do with crypto?

Send and receive payments 

This is the big one.

Crypto, in many ways, allows you to do a lot of the same things that traditional currencies do, except the technology allows you to cut out the traditional intermediaries like brokerages, exchanges, or banks.

"But why?" I can hear you asking. "Don't we already have lots of ways to do that already?"

Yes, but there are drawbacks to the traditional methods.

Here's why you might prefer crypto:

More recently, there have been a number of new advancements in DeFi (decentralized finance). These automated tools are built on blockchain and are capable of stripping out traditional banks for more sophisticated transactions like lending, trading, wealth management, and insurance. 

Invest 

For the past decade, crypto has been, far and away, the best asset class for investment.

Bitcoin's cumulative gains have exceeded 20,000,000% since 2011, and on an annual basis, it's more than tripled year over year.  

This means that your friend, the one who's bitter about buying that song with 5 bitcoin in 2011? She probably paid 10 bucks for that much bitcoin. Had she bought and held it, she'd have more than $30,000 now. 

Much like in traditional finance, each currency has a relative value compared to others, and it's possible to use currency trading techniques to make money as exchange rates fluctuate. 


Yield Farming 

Grow your crypto!

Yield farming allows you to put your crypto to work.

Essentially, yield farmers lend their existing crypto (their "liquidity") to others via smart contracts in return for certain incentives, for example a percentage of transaction fees, interest from lenders, or governance tokens.

Holding a governance token gives you a 'vote' in shaping future smart contracts or protocols, so they can be very valuable. Should you earn one, you might want to keep it for this reason, or you can trade them on centralized exchanges (e.g. Binance) or decentralized exchanges (e.g. Uniswap). 

What about mining?

The TL;DR - mining is just too expensive for the average user today.

Check out our Blockchain Basics page to learn more about: