Written by librarians at the Mercer County Library System in Mercer County, New Jersey.
Cryptocurrency...What is it?
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I am not at all financially literate but, lucky for me, I have access to a plethora of information because I have access to my library...just like you! This year, I decided I am going to try to understand how to invest my money in the best and safest way possible - and not stuff it under my mattress for safe-keeping (just kidding).
There are so many different ways to invest and that has always been overwhelming to me. In my search to invest in something long term, I came upon cryptocurrency - specifically Bitcoin. The word "cryptocurrency" has become a common term in our daily conversations, but the meaning and concept seems elusive and complicated. I found some books at the library that might lead me to better understand exactly what cryptocurrency is, and hopefully make me feel comfortable about investing in it in the future.
In my search to learn about cryptocurrency, I also came across an extremely helpful video on Mercer County Library System’s YouTube Channel called, "Cryptocurrency: Let's Talk About the Basics of Cryptocurrency" which was conducted by Arlene Ferris-Waks from the NJ Attorney General's office on February 2, 2022. Her talk was extremely informative and easy to understand. She even gave resources to contact in case I have any questions regarding different types of cryptocurrencies and their authenticity. A her talk is below:
Based on my research, here is some history on cryptocurrency and where it came from. The global financial crisis of 2007-2008 eroded trust in the government and different financial institutions. Fiat money (coins and paper bills that are the legal tender of a country that is controlled by government regulation) was losing value so Bitcoin was created in 2009. Bitcoin was the first form of cryptocurrency. The true identity of the creator/creators is not known but they go by the name of Satoshi Nakamoto, a mysterious software developer. Mining bitcoin requires a significant amount of capital, expertise, and access to huge amounts of electricity. Also, the mining of cryptocurrency through complicated algorithms requires using powerful computers that are not easily accessible. This now makes it extremely difficult, if not impossible, for a regular person without resources to create cryptocurrency.
Cryptocurrency, being a digital currency that is decentralized and is not managed by any bank or government, is seen as more secure and supposedly limits corruption. It is an international currency whose transaction fees are negligible and personal information is not shared, which is not the case when using credit cards or some other forms of payment. It is easy to open an account with a virtual wallet to send and receive money securely.
Although it seems as if cryptocurrency is secure and private, there are downsides. Hackers and scammers are a threat whenever technology is concerned. Cryptocurrency is seen as a volatile asset. There are extreme price fluctuations and it is possible to lose all of the initial investment. There are no guarantees or safety nets. There are also no reversals on transactions as there are in bank transactions.
So, at the end of my research so far, I am no closer to finding out if I am willing to invest in Bitcoin. However, I will keep learning about this puzzling phenomenon because cryptocurrency is definitely not going away. A quote from page 3 of the book Bitcoin for the Befuddled by Conrad Barski and Chris Wilmer really resonated with me and made me chuckle because it describes exactly how I felt before learning about Bitcoin and how I feel after writing this post. "Anyone familiar with Bitcoin will agree the technology behind it is difficult to explain and understand....It's hard to grasp how bitcoins are stored, how they are used, or even where they come from."
In addition to the enlightening video on MCL's YouTube Channel, I found the following books to be very informative:
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