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LEARNING ABOUT THE
FINANCIAL FUTURE |
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My wife was paying bills at the kitchen table the other day when I
walked in. It seemed as good a time as any to let her know I had come up
with a lucrative investment.
"And what would that be?" she asked when I told her
we were going to be rich.
"Bitcoins," I replied. "Or something similar.
Cryptocurrencies are the latest rage."
Fortunately, she lowered her head slowly onto the table,
rather than slamming it down. "You know nothing about Bitcoins,"
she eventually said. "Nobody understands them."
"I do now," I proudly announced. "I just
wasn't concentrating enough the past seven times someone tried to explain
it to me. But this time I researched it on the internet and I think I get
it."
"OK, Crypto Man, explain it to me."
I assumed she'd ask that, so I forged ahead, hoping she
wouldn't realize I actually had only a vague idea what I was talking
about.
"A cryptocurrency is a digital or virtual currency that
is secured by cryptography, which makes it nearly impossible to
counterfeit. Many cryptocurrencies are decentralized networks based on
blockchain technology, which is a distributed ledger enforced by a
disparate network of computers."
I took a deep breath and looked her straight in the eye. She
wasn't impressed. "You memorized that from Wikipedia, didn't
you?" she asked.
"Maybe. But you get the point."
She went back to paying the bills with her antiquated
checkbook. "I get the point that you still have no idea what you're
talking about."
"Well, it is a little complicated," I admitted.
"But we'd better start figuring it out if we're going to keep
up."
"What else did you learn?"
I looked at my notes and rattled off some facts:
--There are over 6000 cryptocurrencies being traded with a
total market capitalization of over $200 billion.
--Bitcoin, founded in 2008, is the largest. There are only 21
million bitcoins that can be mined (please don't ask about mining) in
total. 18 million have been mined, leaving 3 million yet to be introduced
into circulation.
--You can buy Bitcoins with a credit card, and then spend it
online or in some brick and mortar stores, hold it for investment or sell
it for cash in an exchange or a Bitcoin ATM. It's a bartering system on
steroids.
--Elon Musk apparently owns more than $5 million in Bitcoins
and you can reserve a seat on Richard Branson's Virgin Galactic with
Bitcoins and can happily blast off into space.
I had more notes but my wife was looking a little
glassy-eyed. I decided to spare her any more details for the moment.
She was slightly interested, though, so we decided to call
our niece, who worked for Coinbase, a company that offers a
"secure" place to buy and sell cryptocurrency.
Twenty minutes later, we were more confused than ever. We
heard about Doge Coin, Ethereum, non-fungible tokens (NFT), mini
communities, altcoins, secure wallets, and that damn mining again.
"Still want to invest in Bitcoins?" my wife asked
when we got off the phone.
I mentioned to her that the anonymous founder of Bitcoins,
who goes by the pseudonym of Satoshi Nakamoto and has never been
identified, has an estimated $34.9 billion worth of Bitcoins.
"You know what that means," I added. "We just
need to start our own cryptocurrency."
"Sounds good to me," she replied, always willing to
back me up, especially when she knows it will never happen. "Once you
figure out how it works, let's do it. But I suggest we call it
something besides 'cryptocurrency.' That sounds so creepy. Bad
marketing."
"I'm on it," I replied as I pulled out our laptop
and tried once again to fully understand this newfangled way to replace
cold, hard cash.
After a few clicks, I stumbled upon the answer, at least for
us.
It was a quote from the esteemed investor Warren Buffet, who
criticized Bitcoin and other cryptocurrencies as risky and worthless.
"I can say almost with certainty," said the Oracle of Omaha,
"that they will come to a bad ending."
Those were the words we wanted to hear. No longer would we
struggle to understand cryptocurrency, nor would we be investors. My wife
went back to writing checks with good old American dollars, saddled only
with its $3.3 trillion deficit. All was good. Maybe.
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