What the hell is cryptocurrency? Well here's how i answer that question put simply cryptocurrencies are like regular currencies except they're entirely digital each individual cryptocurrency coin is fundamentally just a collection of numbers and letters this sounds complicated but it's actually not far off from what we see with currencies today here's what i mean by that almost every physical money bill on the planet has a unique serial number this serial number corresponds to information like when the bill was printed where it was printed and so on in theory a record of all money bills that have ever been printed and where they are is kept by a central bank which shares this information with smaller banks and the government if you have a debit card or credit card you'll know that you have an account number on there as well you also have a password or pin number that you use to access the money in that account your bank branch knows your account number and your name because you had to provide your personal information to open an account this info is also shared with the central bank and government now.
Now let's say you have a 20 bill with the serial number abc and your bank account number is one two three when you deposit that bill into your bank account your bank branch the central bank and the government will see and confirm that the 20 bill abc has been moved into bank account number one two three this is almost exactly how cryptocurrencies work each individual cryptocurrency coin is like the serial number you see on a physical bill, just without the physical bill just like regular bills almost every cryptocurrency can be divided into smaller pieces in the case of bitcoin each btc can be divided into 100 million pieces called satoshi's , which are like cents to a dollar a cryptocurrency wallet address is like a bank account except that there's no physical card that goes along with it it's just an account number because you don't need to provide any personal information to create a cryptocurrency wallet this means that your identity is not attached to your crypto wallet like a bank account is most importantly any cryptocurrency held in your personal wallet is held directly by you not custodies by a bank like regular money in a bank account this means that nobody can shut down your cryptocurrency wallet or block your transactions because you have total control over that account at all times now the trade-off here is that if you lose access to your cryptocurrency wallet or forget to write down the recovery phrase you get when you make one well you'll lose your cryptocurrency forever
Instead of banks and the government keeping track of everyone's bills and bank account balances these records are stored across all the computers connected to a cryptocurrency network, these transactions and account balances are public and can be viewed by anyone using something called a blockchain explorer because computers can earn cryptocurrency for processing transactions on a cryptocurrency network this incentivizes more computers to join the network to process transactions and earn cryptocurrency this makes cryptocurrency networks secure because there is no single point of failure this is called decentralization and it's the polar opposite of the centralized setups of governments and banks now in case you didn't put two and two together that means the digital currencies banks around the world are creating are not cryptocurrencies they're creating a seriously dystopian payment network be sure to tell them that the coin bureau has a video about that on their YouTube channels
Once you've blown their minds with that analogy you'll probably get questions about bitcoin and dogecoin and any other cryptocurrencies they've heard about here's what i would say while you've probably heard of bitcoin and dogecoin there are actually thousands of cryptocurrencies just like there are hundreds of different regular currencies could be considered low risk investments cryptocurrencies like bitcoin ethereum and cardano are likely to be around for many years and they will likely double if not triple in price before this bull market is over the other 90 cryptocurrencies in the top 100 could still see gains of 3 to 5x but the further you move down the list the riskier the investment becomes because it also takes less capital to crash their price i would personally stay away from any crypto that isn't among the top 200 by market cap because most of the quality projects have already come out of the woodwork and going any further is just gambling.
