If you read that title and thought “English plz” then this newsletter is for you.

Like it or not, cryptocurrencies are now on the world stage of investing. The global market of cryptocurrencies is now more valuable than Google, there are more than 500 crypto funds listed worldwide, and big companies everywhere are starting to invest in crypto. 

But let’s be honest, crypto can often sound like made-up nonsense. So, in this special two-part newsletter (!!!), we’re going to simply break down what cryptocurrency is, how it works, and what it’s good for.

Ready to HODL? Also ready to learn what HODL means? Let’s hit it. 

What is cryptocurrency?

Cryptocurrency is a type of digital money that exists only online. Unlike regular money, like dollars or euros, cryptocurrency isn’t controlled by any government or bank. Instead, it’s based on a technology called blockchain. 

A blockchain is like a digital ledger or notebook that records every transaction made with cryptocurrency. This ledger is shared across many computers and can be seen by anyone, making it secure and hard to hack/change. If you were to try and fake a transaction or hack the blockchain, you would have to do it across every computer that records the transaction at once, and there are more than tens of thousands!

In simple terms, cryptocurrency is money you can use on the internet, with a system that ensures all transactions are safe and transparent.

How did cryptocurrency come to be?

Bitcoin (you’ve definitely heard of this one) was the first cryptocurrency. It was created in 2009 by someone (or a group of people, nobody is quite sure) using the name Satoshi Nakamoto. 

Before Bitcoin, people had tried to create digital money, but it never really worked out. Bitcoin was different because it used blockchain technology to solve something called the problem of double-spending. The double-spending problem is when someone tries to spend the same digital money twice or more. With physical dollars, it’s easy to stop the double spend problem because when you give someone a physical dollar you no longer have that coin to give someone else. 

But with money online, it’s more tricky. Bitcoin’s public record of transactions means that you can clearly see when someone has paid someone else. This way, everyone would know if you tried to send fake cryptocurrency.

How do cryptocurrencies work?

There are a few different ways, but let’s focus on Bitcoin as it’s the biggest. Bitcoin is managed entirely by computer code. Bitcoin is created by a process called mining. Mining is where computers verify and record transactions on the Bitcoin network. As a reward for their work, miners earn new Bitcoins at a decreasing rate over time. 

This is where things get tricky. To verify and record transactions on the Bitcoin network, computers mining Bitcoin must first solve a complex math problem. The math problems that miners solve are like locks that protect the Bitcoin network. By solving these problems, miners "unlock" the ability to add new transactions to the blockchain. This process ensures that everyone is following the rules, keeping the network safe and secure.

One key thing to note about Bitcoin is that it has a fixed maximum supply. This means that there is a maximum number of Bitcoins that will ever exist - 21 million. This is a huge difference from dollars, which can be printed by government central banks whenever they feel like it. This means that as time goes on and more people start using Bitcoin, it’s likely to go up in value.

So to sum it all up:

• Cryptocurrency is money that exists only online

• It’s controlled by computer code as opposed to any government

• Cryptocurrency is managed by a technology called blockchain, which is a public record used to ensure nobody fakes transactions

• Bitcoin is created through a process called “mining” where, in exchange for making sure that transactions on the blockchain are real, computers receive Bitcoin

• But, there is a maximum supply of Bitcoin - 21 million. Once 21 million Bitcoin are mined, that’s it! No more.

Maybe the most important question - why does crypto matter?

There are a few reasons.

• Easy access to money: Cryptocurrencies can help people who don’t have access to traditional banks. All you need is a smartphone and internet connection to send or receive money.

  

• Lower transaction costs: Sending money across borders with cryptocurrencies can be much cheaper (just a few pennies) than using banks or other traditional services, which often charge high fees.

  

• Security: Because of blockchain technology, cryptocurrency transactions are secure and cannot easily be tampered with.

  

• Global accessibility: Cryptocurrencies can be used by anyone, anywhere in the world, making them a truly global form of money.

  

Are you a believer?

Or are you reeling from info overload? We’ve covered a lot of ground - what cryptocurrency is, where it came from, how it works, and why it’s important. 

In part 2 of this deep dive, we’ll explore the risks and challenges of investing in cryptocurrencies, introduce you to some of the most popular digital currencies, and provide a simple guide on how to start investing. 

Stay tuned!

PS - want to know what HODL is? Check out this video.

PPS - I know this is a tough topic, so here are a few good video walkthroughs to help you understand better!

Beginner’s guide to crypto (23 min)

Bitcoin explained (3 min)

Blockchain explained (7 min)