Help me understand cryptocurrency please

[razz]

Goldman Sachs manager just left after great gains in the Dogecoin currency invested through his personal account. I don't understand what that cryptocurrency account entailed. So much is mentioned and I question if the reports truly understand it as they does not explain it very well, IMHO anyway.

My very simple summary:

Current banking
Pros - subject to legal jurisdictional oversight, relatively transparent, employs a lot of people, accepted around the world in all currencies.
Cons - significant fees, some fraudulent activities, vulnerable to cyber theft

Cryptocurrency to my very limited understanding:
Pros - no fees, ? Some will gain substantially (but many will lose it seems).
Cons - no legal jurisdictional oversight, hidden transactions, unknown and unlimited risks, limited employees, could take over world financial processes with dubious manipulations and directions. Ponzi scheme?

Any info in terms that my general knowledge of finance would understand would be most appreciated.

FYI, I have no intent of investing in cryptocurrency or anything that I do not understand.

[iris lilies]

Just a few minutes before reading razz’ post, I read the post on mr money mustache about “explain crypto to me as thoughni am five.”

it didnt enlighten me any.

I have decided that crypto is just not one of those things i will try to understand and I will be OK.

[LDAHL]

I have heard a lot of coin-descending explanations, but my basic understanding is this:

While previous forms of currency were backed by precious metals or governments forcing you to accept them, cryptocurrencies are backed by a combination of wasted electricity, remembering passwords and fear of missing out.

They are transacted using secure ledgers based on blockchain technology algorithms which will never, ever be hacked by people with the same skill sets and resources as the people who developed them. Trust us on this.

Given the possibility that the government may soon run out of our grandchildren’s money, many smart people seem to consider cryptocurrencies as a reasonable alternative to the US dollar. Especially for critical transactions like ransomware payments, informal pharmaceutical purchases and weapons sales.

[iris lilies]

I have heard a lot of coin-descending explanations, but my basic understanding is this:

While previous forms of currency were backed by precious metals or governments forcing you to accept them, cryptocurrencies are backed by a combination of wasted electricity, remembering passwords and fear of missing out.

They are transacted using secure ledgers based on blockchain technology algorithms which will never, ever be hacked by people with the same skill sets and resources as the people who developed them. Trust us on this.

Given the possibility that the government may soon run out of our grandchildren’s money, many smart people seem to consider cryptocurrencies as a reasonable alternative to the US dollar. Especially for critical transactions like ransomware payments, informal pharmaceutical purchases and weapons sales.

mr money mustache poster(s) are recommending holding a little bit in crypto, mainly for the chance it goes sky high.

I suppose having it to buy my goods and services on the dark web would be a good reason, too.

[bae]

https://images-na.ssl-images-amazon.com/images/I/91QYlnhGgFL.jpg

[Teacher Terry]

I don’t have a great understanding of it but my oldest son does. For a investment of 3k about 7 years ago they made 100k and us 50k. We all still have some and will be cashing out slowly as it rises this year. My son had to find a cpa that specializes in it to do his taxes. My son intends to keep some of his but I am cashing out entirely.

[iris lilies]

I don’t have a great understanding of it but my oldest son does. For a investment of 3k about 7 years ago they made 100k and us 50k. We all still have some and will be cashing out slowly as it rises this year. My son had to find a cpa that specializes in it to do his taxes. My son intends to keep some of his but I am cashing out entirely.

That is great TT and I know you mentioned earlier that you made a significant sum.

[LDAHL]

mr money mustache poster(s) are recommending holding a little bit in crypto, mainly for the chance it goes sky high.

I suppose having it to buy my goods and services on the dark web would be a good reason, too.

What’s their consensus on Non-Fungible Tokens?

[Teacher Terry]

We were willing to lose the 3k and it turned out well. It was great for my kids because she had to take 6 months off work for her brain surgery.

[iris lilies]

What’s their consensus on Non-Fungible Tokens?
Is that a real thing? I have no idea.

[razz]

IL, thank you for helping me understand that I am not alone in lack of knowledge on this; Bae, for an excellent visual self-explanation; Idahl for the droll cynical view and TT for her report of success.
I now know for sure that I don't know and won't be finding out either. Anytime, I hear "trust me on this", I am outta there.

[oldhat]

There are numerous historical precedents. At least when this one (https://en.wikipedia.org/wiki/Tulip_mania#:~:text=Tulip%20mania%20(Dutch%3A%20tu lpenmanie),dramatically%20collapsed%20in%20Februar y%201637.) was over, you still had some flowers.

[iris lilies]

There are numerous historical precedents. At least when this one (https://en.wikipedia.org/wiki/Tulip_mania#:~:text=Tulip%20mania%20(Dutch%3A%20tu lpenmanie),dramatically%20collapsed%20in%20Februar y%201637.) was over, you still had some flowers.
There is an academic study that refutes Tulipomania as anything other than a brief bit of entertainment for Dutchmen during a long winter or two as they gathered in bars to socialize.

I made an educational display on Tulipomania for a garden club flower show, and I took the view of our popular culture, that speculation on tulip bulbs was influential and rife in the society of 1637 even tho it likely was not.

[LDAHL]

Is that a real thing? I have no idea.

“Real” may be a subjective term in this area, but from what I understand NFTs are digitized tokens denoting ownership of virtual property, such as the original copy of a work of digital art or real estate in certain video games. Some have sold for surprisingly real amounts of money.

[LDAHL]

I see Tesla will not be accepting bitcoin in payment for their cars, citing environmental concerns.

[razz]

I see Tesla will not be accepting bitcoin in payment for their cars, citing environmental concerns.

Am I the only one thinking that there is more to this story with Tesla and bitcoin?

[LDAHL]

Am I the only one thinking that there is more to this story with Tesla and bitcoin?

I think if a tweet from one guy can drive a significant price change, it’s prudent to treat something like a penny stock or collectible rather than an important currency.