Tag Archives: Bitcoin

Understanding Crypto: Should We Get Into Cryptocurrencies?

Cryptocurrencies, NFTs, DeFi, seem like they're quickly becoming part of our conversations, but what's behind it all? Today we’ll look at how crypto works!

Should We Get Into Crypto?

In the last episode, I mentioned that I did a money experiment. If you're subscribed to the newsletter, you got a sneak peek of what we're talking about: cryptocurrencies.

While crypto isn't anything new. In the last few years, especially within the last year. I've just noticed a dramatic shift in promoting them. I've also noticed that there's been a lot more noise and big promises and not much in the way of education.

I see companies spreading the word about crypto focused on how revolutionary it is and how we can close the wealth gap. But I don't see enough discussion about the underlying technology behind it, and how it actually works.

I'm a big believer in educating yourself and understanding things before you go invest in them.

Based on the feedback I've been seeing with you guys in the community. I see that some of you are dabbling in crypto, but you wanna know more.

I decided I was going to do six-month experiment to learn a little bit more about the ins and outs of crypto.

This isn't the first time I learned about cryptocurrency. But it is the first time I dedicated myself to sitting down reading the articles, and talking within the community to understand how the technology works itself.

I wanted to learn how easy was it to buy, sell and mine the crypto coins.

Man, what a time I jumped in! Just in the past six months, we've seen:

So there were a lot of things happening, but for me, this was an opportunity to understand the pros and cons up close.

Even with everything down and people questioning whether crypto is here to stay, there are plenty of people who are saying now is a great time to get into it because it's so cheap. But is that really true or is it just hype?

That's why I made this episode. It's not a deep dive into crypto but instead, it's meant to give you a lay of the land. So you can decide if it's something that you want to explore further.

In today’s episode, we’ll get into:

  • How  exactly do cryptocurrencies work
  • Decoding crypto terms that are thrown about
  • How you can buy, sell, and yes, mine some

I hope you enjoy!

Resources to Understand Crypto

If you're looking to explore crypto and the tech behind it, here are some really helpful resources to learn and stay on top of your money!

If you’d like to chat more about your money system, please join us in our private and free Facebook group – Thriving Families

We’re families looking to support and help one another out.

Hope to see you there!

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How Does Crypto Currency Work?

Before we get into the different cryptocurrencies and how to buy, sell, or mine them, let’s go over how they work. 

Since we’re using this word currency, I’ll start there. 

With crypto, it’s not owned by an individual or a particular company. No bank or government is issuing it. It’s decentralized, hence the term DeFi. 

Its value of it is determined by the community, supply, and demand. There’s no gold or government backing it up. 

Some key components and technology with cryptocurrencies are blockchain. 

Think of the blockchain as a public record or ledger where every transaction is recorded. The community all has a copy. 

It’s append-only, meaning you undo a transaction. Instead, you would document the transfer and then the ‘refund’.

It’s designed so two strangers can exchange without getting approval from a bank or a merchant like Paypal or Venmo. 

Wallet and Key

Just like you probably have a wallet with your cards and cash, you have one with crypto. Because there’s no central power regulating it, it’s even more important for you to keep your wallet secure. 

You can have your wallet online, called a hot wallet or you can have an offline or cold wallet. 

There are two keys for your wallet, a public and a private one. Your public key is kind of like your bank account. That’s what’s included in the edger when you make a transaction. 

Your private is then like a password/PIN so you can access your wallet. You want to keep your private key in a safe spot because if you don’t, you can’t get that money. 

More Than Bitcoin

Even though bitcoin has the biggest market cap and is one of the most well-known currencies, the crypto market space has vast options. If you go to CoinMarketCap you’d find just under 10,000 coins being tracked. 

Some other big ones include Ethereum, Tether, Cardano, Solana, and dogecoin. 

Decoding Crypto Terms

All right, so we covered a high level review of how crypto works. As you can see even going over the essentials and fundamentals. There's a lot of terms that are used that are very specific to this space. Right now, I want to hone in a bit on the coins and how they work.

We mentioned this briefly when we were talking about high energy usage. With coins, you can lump them into two groups based on the method on how they validate those transactions that are made.

Remember, everything is on that blockchain it's on that ledger, but how do you validate it since we don't have a central unit verifying things?

The verification is done through the community and the two main systems coins use are proof of work and proof of stake.

With proof of work, this is what the older coins like Bitcoin, Ethereum, the. 1.0 and dogecoin use.

A miner or a person with a computer and the hardware runs algorithms to validate that transaction and in return, they can earn more coins. It is secure, but it uses a lot of energy and it is slower.

With proof of stake system, the validators actually would put in a token. Kind of like collateral and they would validate those transactions.

And as a reward. They would get more of that coin. Coins using proof of stake include Ethereum 2.0, car Dano and BNB.

Wait a minute. I just mentioned token and I just met, mentioned coin. So, let me just break that down a little bit further.

With that proof of stake system, the coin is the actual, let's just say the actual currency, the one that has the value is being exchanged.

In this case, the token, it gives you that right to validate the transaction. So that is not a part of the blockchain. It's kind of a system that's built on top of that.

Hopefully, I didn't lose you there.

Finally, I want to talk about stablecoins. These are cryptocurrencies that are actually kind of almost like a hybrid because they're cryptocurrencies, but they're tied to an asset. One popular one is the us dollar. And the idea behind it is to minimize the volatility.

Many platforms actually also offer competitive interest rates if you invest in hold stable coins. Now this doesn't mean that it's completely safe. We've seen recently with Tara. That there is risk involved and you may lose your money with that.

Now, hopefully that gives you a better idea of the different types of coins that are out there and how they work.

There are so many topics that we can get into because they're connected to crypto. But I'm not going to cover them because they're outside the scope of what we're talking about.

But I definitely want to recommend that you research into, web 3.0 and NFTs. They deserve their own episodes because it can get really complicated, very fast. And there's a lot of people that are hyping it up but not really explaining the technology.

How to Buy, Sell, and Mine Crypto

Let's say you're interested in learning more about crypto and you're thinking about doing your own money experiment. Where do you start? How do you buy trade in mind the crypto?

Well, I have some good news for you. It is much easier to get into the crypto space, try things out and learn a lot more.

Buying, Trading, and Selling Crypto

Let's start off with buying trading and selling. You can work directly with each coin, but now there are different exchanges like:

They almost make it as easy as logging into your bank or logging into your investment company.

The bad news is you definitely have to be informed before you do, because there is a lot of hype out there.

Whatever platform you decide to use, though, you definitely wanna do your homework because this is not centrally regulated. You're kind of on your own.

Please don't put a significant amount of money in until you educate yourself about the risk. Read those reviews carefully and talk with their customers to see which one would be the best fit for you.

For this money experiment, I went with Coinbase. It was a combination of things. I liked that they had access to more than 150 cryptocurrencies. It was fairly easy to set up and use. Plus you can actually earn some crypto for free by watching video lessons and taking quizzes.

I signed up verified by the identification and also linked my bank account. Because this was an experiment I focused on just two coins. I went with Ethereum and Solana, but I did take advantage of their learn and earn opportunity.

I have about a dozen cryptocurrencies that I'm currently in, but most of them with the learn and earn aren't significant amounts, but just enough to understand the different technologies that are there.

While I do like having something like Coinbase, I find it ironic that for many people, that's the easiest way to enter because it's introducing a middle man.

One of the things with the cryptocurrency space is it's trying to be more direct. I think we're still in the early stages and there's a lot of issues that have to get worked out. But if you are considering getting a little bit into cryptocurrencies and learning more using a platform like this is probably the most convenient way to go.

Now with mining you can actually earn some cryptocurrencies with your computer and, there are three key components to this.

You have your wallet, which we've mentioned before, your hardware, which is your computer and then your mining software.

With mining cryptocurrencies, you have to have a software program. Honestly, I thought this would be one of the easier parts of the process, but it turned out to be quite hard.

The reason was I was trying to find a software I was comfortable with and really you're downloading a program that unless you're a programmer or have experience with software, you don't know what you're putting on your computer.

There are different options out there. I was looking at reviews. Some of the popular ones I saw were multi, minor CG, minor, easy, minor BFG minor.

The one I ended up with for my experiment was nice hash. I did like that they owned every piece of the software and they had a good reputation and it was very simple to use.

The last part of that was the hardware for crypto. I think many people think, oh, because I'm mining it, it's free, but there's two costs that are associated with that.

You need to consider one the electrical use, but then to the hardware itself for the computer.

If you're mining, Bitcoin, your computer needs to be able to perform intensive equations. And that means that you're probably gonna have to buy specialized hardware unless you have top of the model series.

Mine is an Nvidia RTX 30, 70 T. T I, which is retailing now between 600 to around $900. It's not cheap.

So is mining profitable? Can you make some money off of it? Well, right now I would say no. That's because the value of the crypto market has dropped considerably. So if you're looking for a quick win, this is not the way to go. But if you do believe that the value will go back up, you can mine it now and hopefully see that as investment for the future.

All right. So that is the basics of buying, selling, and mining. You probably have some more questions about it. If you're a newsletter subscriber hit reply and send your questions in, or go to our free Facebook group called thriving families, where we talk about that intersection of family finances.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

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Photos by Alesia Kozik and RODNAE Productions

Should We Invest in Cryptocurrencies?

Cryptocurrencies like Bitcoin, Dogecoin, and Ethereum are a part of the mainstream conversation and in the news but should it be a part of your investment plan?

We're going to decode the terminology and explore the tech so you can weigh whether or not it's the right option for your family!

Should We Include Cryptocurrencies In Our Investments?

We're talking today about a topic that has been popping up all over – Cryptocurrency.

Just this year alone, Bitcoin, Ethereum, and many others. Have been on a roller coaster ride with their prices. Coinbase just went public this April. And there's a lot of excitement and questions about the crypto space.

And there are couples who don't quite see eye to eye on this. I've gotten questions, first of all, about how exactly these currencies work. And then second, if now is the time to jump in and invest in it.

In some cases from what I'm hearing, one of you is excited about this new opportunity. While the other is skeptical or just plain against it.

Like any major decision it's important for your marriage and for your money. To discuss your options and make sure that it fits in with your goals and financial plan.

In this episode, we're going to get into the essentials about the tech and terms use with cryptocurrencies. And then we'll talk about what to consider and discuss so that the two of you can decide whether or not it's the right option for you. We have a lot to cover so let's get started!

Resources to Dive Into Cryptocurrencies and Manage Your Money

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Decoding Crypto: Understanding Blockchains

Before we decide whether or not cryptocurrency is the right move for you, it's important to talk about some of the essential and foundational terms and tech that's being used.

Blockchain

While the idea of having digital currency is in itself interesting the technology behind it specifically, blockchain is the real star.

Basically think of a blockchain as a public and digital ledger of all transactions.

Typically when we make transactions, for example, paying bills, buying something from a store or selling online. There's some communication not just between buyer and seller, but between our bank and whoever we're dealing with as well.

Our banks are checking with each other to make sure that there's enough money to cover the transactions.

To a degree that makes sense, but like everything, there's a cost in that not just with transaction fees but also the time involved.

There's a bit of a delay between the two parties. Yes. You can pick up your item or you can sell it, but then you go and log on online with your bank and there's that pending charge. And it could clear quickly, or it could take a little bit of time.

With blockchains that is significantly reduced on both fronts because you're dealing directly as buyers and sellers. In that public ledger keeps a record of all transactions, not just yours but everyone who is using that digital currency for example.

Instead of using bank accounts, you have your digital wallets part of the security is that you have a private and public key.

The public key part allows you to receive. Your digital currency. And then the private key is allowing you to spend that currency with your wallet.

Within that space itself, whether it's Bitcoin or Ethereum or whatever currency you're using, the idea is you don't need a central bank because that security is built into that community.

Encryption is used to protect your wallet from any unauthorized access. And because you have that ledger containing all the transactions and balances that takes the place of a bank having to verify that you have that money in.

The system is decentralized. Being decentralized is a selling point in itself for some people.

Understanding Crypto

All right. So that's blockchain in a nutshell. Let's talk about cryptocurrencies.

Bitcoin

We're going to start off with bitcoin. It's the most well-known and it successfully, kick-started this idea of a new type of currency, something that's decentralized.

If you love a good mystery, you might like this.

Bitcoin was introduced through a white paper by a person or persons – we don't know for sure – known as Satoshi Nakamoto.

One way to think about Bitcoin is to think about it as gold, specifically, when we talk about mining.

Basically mining is computers crunching and solving complex math equations. It's meant to mimic the effort involved in physically mining, precious metals.

Now there's a whole conversation that can be had on the impact that this mining is having in the real world. But that's for another episode, another podcast.

What I want to highlight is the scarcity that's built into Bitcoin's design with a finite number of Bitcoins in existence.

Ethereum and Ether

Let's talk about Ethereum now. First off. It isn't a cryptocurrency, even though it's usually spoken along with Bitcoin and doge coin.

Ether is actually the cryptocurrency. Ethereum is the network. This difference is what makes it really interesting technology wise for a lot of people. With that network software developers can create smart contracts and decentralized applications.

With smart contracts, you can automate certain transactions. Think about not having to call customer service. And argue about rescheduling, a flight, or maybe getting a refund for a canceled concert. Or another event.

That's the power and potential of Ethereum. This can go beyond just financial transactions.

Dogecoin

Finally, let's talk about doge coin. Whew. Okay. First off, it literally started off as a joke. Of response to Bitcoin and it's based on a meme.

It really isn't designed like Ethereum or Bitcoin.

For example, there's a certain scarcity that's baked in either by design with the limited supply. Or by some kind of community consensus or planning. With doge coin, the supply just keeps growing.

Again, this was started off as a joke, and I believe the creator had mentioned it took only a few hours to make.

It's definitely become a huge community and it's very popular online, but out of these three options, I would say this is the most speculative.

So for me, unless something changes with doge coin I'm not gonna put any money into it.

Stable Coins

Now, if you're looking at the traditional cryptocurrencies and you want to dip your toes in, but you're not ready to deal with the volatility then there's a different class of cryptocurrency called stable coins.

By pegging itself to a cryptocurrencies and Fiat money or a commodity, it offers some price stability.

Like I said, this is a very high level, brief review of the key terms and tech of cryptocurrency.

I believe that learning the essentials of whatever you're investing in is the first step.

Should Crypto Be a Part of Our Investments?

How will you invest your money is your choice, however you owe it to yourselves to evaluate your decisions together.

If you're planning on getting into cryptocurrencies. Here are a few things that you should talk about:

How does this fit in with your investment plan? How would crypto be a part of your overall plan? There are differences between investing and speculating.  

How comfortable are you with the volatility? You need to be real honest with one another about this.

If there's one takeaway I've gotten from watching cryptocurrency prices, it's impossible to predict what's going to happen day to day.

Can you block out the noise? If there's one takeaway I've gotten from watching the cryptocurrency prices, it's that it's impossible to predict what's going to happen day to day.

Can the two of you block out the noise? There's a lot of information going out there about cryptocurrency, but not all of it is high quality. You want to make sure that the information that you're getting gives you an objective view of what's going on.

Review your finances. Make sure that you have that foundation in place. Is your portfolio diversified?

Are you contributing already to tax advantaged accounts? This might not be the most exciting part of finances, but it is important that you have those pieces into place. Before you start putting money into cryptocurrencies.

Don’t forget taxes. Just remember when you're trading, you're typically going to have increased costs.

This is outside my wheelhouse of expertise, but just know in the eyes of the IRS that your cryptocurrencies are treated as investments and are subject to capital gain taxes.

You have to make the best decision for you. But my key piece of advice is if you do decide to get into cryptocurrencies, don’t put money in that you can’t afford to lose.

Starting with a smaller amount can give you some exposure without taking on a ton of risk. As you get more comfortable, you can increase that amount. HJust make sure you’re educasting yourself along the way. 

One way you can learn and actually earn crypto is using Coinbase.

It's a cryptocurrency exchange platform that makes it easy to get started. One feature that I like, is there a section where you can earn rewards and it teaches you about different cryptocurrency.

No, you're not going to get a ton of money with it but it helps you become more familiar with the technology and the different currencies that are out there.

Right now they also offer $10 in BTC when you buy or sell $100 of crypto. Just check it out here for the details

Please do not join Coinbase, if you're not interested or comfortable with cryptocurrency.

I want you to make the decision that's right for you and your situation. 

Investing in Cryptocurrencies

And another thing to consider is whether you’d rather put money in companies working in the space like Coinbase.

This is not a stock tip. You really have to put in your due diligence with anything you invest in. 

I’m just throwing out another option that you two can look into. 

Make sure however you invest or get involved with cryptocurrency is aligned with your overall financial game plan and your risk tolerance. 

Key Takeaways on Crypto

Before we wrap up, I want to share a few key takeaways I got from preparing this episode.

  • Invest in educating yourself about the tech behind cryptocurrency. This technology is not going away. Becoming familiar with it can put you in a better financial position even if you're not directly getting into cryptocurrency.
  • Make sure that crypto is aligned with your goals and risk tolerance before jumping in. For some couples, there's this anxiety and fear of missing out which is not good when you're trying to think longterm and objectively about the best financial decision.
  • Focus on investing, not speculation. There's a lot of hype and volatility to sort through. So make sure that as you're putting money in, if you decide to go that route, that you understand that this is for the long-term. And not some get rich, quick scheme.

If you want to discuss this more, ask questions, swap ideas, maybe learn a little bit more of crypto currencies from others who have gone into this space– don’t forget to join us in the Thriving Families group on Facebook.

We’re all about helping one another out with our family and financial goals. 

Hope to see you there!

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Music Credit

Our theme song is from Staircases. Additional music by various artists from Audiio.