C – Cryptocurrency Explained For Seniors
Hello, this is the third post in continuation with the Blog chatter’s A2Z challenge. As I had mentioned earlier that my theme for this challenge is about second innings, that is for the people who have attained 60 years of their existence on the planet or retired from the active work life. This is the crossroad where many get confused as they do not know what to do with their time. They only knew what they were doing in the office. I shall be writing 26 posts to keep seniors abreast with tips and new things around to manage their life in this second innings for the betterment of their physical, mental, financial, and spiritual betterment.
Let us welcome the second innings with open arms and fill it up with laughter!
Today’s post is about adding knowledge to our already rich financial acumen. We have been listening to the word “Cryptocurrency” for the last decade or so. But it has been making too much noise in recent times. The word has been thrown so often to us that now it is not easy to ignore or deny its presence.
Do you find it confusing? The new generation is crazy about it. My son, who always discusses every investment with his father, more so, if it is an investment in equity but he did not discuss a word about his investment in cryptocurrency. His excuse is, papa does not understand this. And in reality, papa does understand it as he is a chartered accountant. He is a conservative investor, and his prudence is not being an aggressive investor in something which is not yet proven. This is fine as seniors’ appetite for risk shrinks with age.
Anyway, let us explore together about this new financial instrument?
This is a currency that does not exist in physical form. This is a confusing concept, and rightly so for people who have always seen money in physical forms. I will be trying to simplify this concept to help understand the intricacies and complexities of the thriving crypto market.
Cryptocurrency – A virtual form of currency, secured by cryptography thus making it almost impossible to counterfeit or double spend. Since it exists in virtual form, it can be used to make digital payments and buy online, provided the website has the provision to make transactions in crypto. Another important fact about cryptocurrency is that it is not issued or controlled by any government in the world but by computer systems.
When money is withdrawn from a bank account, the bank approves the transaction after checking the account balance. Here the bank is the trusted entity by the consumer. In the case of cryptocurrency, the verification is done by thousands of computers. This process is called mining. This is encrypted by 256-bit cryptographic keys and is an extremely secure system. It is decentralized which means, no single entity is in charge. Cryptocurrencies are stored in a digital wallet that is accessible by a super-secure password.
Bitcoin is the most popular and valuable cryptocurrency. An anonymous person called Satoshi Nakamoto invented it and introduced it to the world via a white paper in 2008.
It was launched in 2009, and thereafter several thousand new types of cryptocurrencies have cropped up. Blockchain technology is open-source, and literally, anyone who knows coding can come up with a new cryptocurrency. Ether is currently the second-largest cryptocurrency by market value.
The legal status of cryptocurrencies has implications for their use in daily transactions and trading.
As of December 2021, El Salvador was the only country in the world to allow Bitcoin as legal tender for monetary transactions. In the rest of the world, cryptocurrency regulation varies by authorities. Japan defines Bitcoin as legal property. China has banned cryptocurrency transactions within its financial systems. India was reported to be formulating a framework for cryptocurrencies
It is not useful if you think of buying your groceries and daily need ration in India but yes, if you are in ElSalvador, you can. 🙂 Governments across the world are opening up slowly but it may take time.
This article is an effort to address the “fear of missing out”, FOMO for the seniors.
If one goes by the advertisement, it appears to be an easy money-making bandwagon. Should middle-aged or senior citizens board? Consider the statistics first.
Nov 6 – Nov 13, 2021 –
Bitcoin price on Nov 6 – $60,163.8
Bitcoin price on Nov 10 – $68,789.6 – Up by 14 %
Bitcoin price on Nov 13 – $63,303.7 Down by 8%
There can be many such examples. Among cryptocurrencies, Bitcoin is less volatile. Others are more. So clearly, Cryptocurrency investment is not for the weak-hearted.
Anyway, don’t forget the old saying – Do not put all your eggs in one basket. If you plan to invest in crypto, let it be a very small part of your portfolio. Also, it has nothing to do with the government.
I am participating in #BlogchatterA2Z .