Now that we know what cryptocurrencies are, how they started, and how they work (check last week’s newsletter) we can all transition into full-on crypto bros.

Today we’ll go through some of the most interesting cryptos, how you can get started, and what the future looks like for the industry.

But before we get into the fun stuff (yay!) we gotta do the safety announcements (boo). So picture me now as a flight attendant outlining the emergency procedures aboard the rocket ship that is crypto.

What are some of the risks of crypto?

Sorry to rain on your billion dollar Bitcoin price targets, but there are a few risks in crypto:

• Market volatility: Cryptocurrency prices can go up and down very quickly. One day, your investment might be worth a lot, and the next day, it could drop in value. This makes crypto more unpredictable than traditional investments like stocks or bonds.
  
  Let’s put this volatility in context. The U.S. stock market had annual volatility of less than 20% over the last ten years. This means that it usually goes up and down in value by less than 20% per year. Bitcoin’s volatility, however, was over 200% back in 2014 and has decreased to around 50% today. That’s a lot! But, as you can see volatility has been decreasing over time.
  
  

  

• Regulatory uncertainty: Governments around the world are still figuring out how to regulate cryptocurrency. New laws could be made that affect how you can use or trade crypto, adding an extra layer of uncertainty for investors.
  
  That being said, regulation is becoming more clear as governments around the world has been increasingly approve crypto to be widely available for investors through vehicles like ETFs.

  

• Security Risks: Because cryptocurrencies are digital, they can be targets for hackers. If your digital wallet or an exchange you use gets hacked, you could lose your investment. It’s important to take steps to protect your crypto, like using secure passwords and storing your coins in a safe wallet - more on that later.

But hey, it’s not all bad! No reward without risk! So, if you’re okay stomaching some volatility and uncertainty, crypto could be worth investigating further. Just make sure you protect it against hacks (we’ll tell you how). 

Now, on to the fun stuff.

What are the most popular cryptocurrencies and what do they do?

Trivia question: how many crypto currencies are there? Answer: more than 22 thousand. For context, this is about half as many stocks as there are in the world. 

So, there’s a lot to track, but there’s a couple big ones worth paying attention to:

• Bitcoin (BTC): Bitcoin is the first and most well-known cryptocurrency. It's often called "digital gold" because it's seen as a store of value, similar to how gold is used. People use Bitcoin to buy things online, invest, or transfer money across borders.
  

• Ethereum (ETH): Ethereum is different from Bitcoin because it’s not just a digital currency. It’s also a platform where developers can build apps using smart contracts. Smart contracts are like automated agreements that work without needing a middleman. Ethereum is used for things like decentralized finance (DeFi) apps, games, and even digital art (NFTs) - more on those below.

Outside of these two, there’s new cryptos being launched every day. A good place to track their prices and learn about new ones is CoinGecko. Whether you want to keep updated on the big AI-related cryptos or just gamble on some meme coins, always do some research before buying!

How can I start investing in crypto?

If you’re ready to start investing in cryptocurrency, here’s a quick guide to help you get going:

1. Set Up a Wallet: A digital wallet is where you store your cryptocurrency. There are two main types:

• Hot Wallets (connected to the internet, easy to use but less secure). Easy one to check out here is Coinbase Wallet. 

• Cold Wallets (not connected to the internet, more secure but less convenient). Start with a hot wallet for small amounts and consider a cold wallet for larger investments. The leader to look at here is Ledger.
  

  

2. Choose an Exchange: An exchange is where you buy and sell cryptocurrency. Look for an exchange that is easy to use and has good security features. Honestly, the best place to start here is probably Coinbase. They’re easily the most user-friendly. I swear they don’t sponsor us…but we wouldn’t mind that. 

3. Start Small: It’s a good idea to start with a small amount of money you can afford to lose. Like we talked about, cryptocurrency investing can be risky, so it's best to ease into it slowly.
   

4. Stay Safe: Always protect your investments by using strong, unique passwords and enabling two-factor authentication on your accounts. Be cautious about phishing scams and never share your wallet’s passwords or keys with anyone.

What does the future hold for crypto?

The world of crypto changes faster than we can keep up, but here’s a few big things cooking. 

• DeFi (Decentralized Finance): DeFi is a new way of doing financial transactions without banks or traditional institutions. It uses smart contracts on platforms like Ethereum to create services like loans, savings, and trading.
  

  

• GameFi: This combines blockchain-based gaming with decentralized finance (DeFi) elements, allowing players to earn cryptocurrency or digital assets by participating in games. These assets, often represented as NFTs, can be traded or sold, blending gaming with financial incentives.
  

  

• NFTs (non-fungible tokens): You’ve probably heard about this with news stories on people buying JPEGs for millions of dollars, some of which are now basically worthless. But NFTs can be used for lots of things - music, art, tickets, or digital assets in games. NFTs are digital items that are provably unique by being stored on the blockchain. Think about a company like Ticketmaster using NFTs for ticketing (already happening) - this is a big opportunity!

Do you understand crypto completely and clearly now?

TBH I’d be surprised if you said yes. Crypto is definitely complicated and changing so fast. 

To make it super simple: our lives are becoming more online and digital every day. Crypto is the best method we have to transfer value digitally and manage complex systems online. Crypto has also been adopted at a faster rate than the internet.

Is it tough? Yes. Is there money to be made? Maybe. Is it worth learning more about? Absolutely.