CryptoDummies FAQ

So I have a few friends that are very hesitant to jump on the cryptocurrency bandwagon. They are pretty much buying into the notion that this is only used for silk road type purchases and everyone who invests must be some type of drug addict or dealer. Sound like any of your hesitant friends?

With these same friends, I got into a recent Q&A which helped them better understand what it is and how it works. This was in it's most basic understanding to help clear any of the pre-conceived notions of what this currency is. I thought I would pass along in case you also needed to break down what it is to your skeptical friends.

Here's the conversation in FAQ style format:

1. Are you invested in bitcoin?
I have some investments in bitcoin, but really only use this as a long term investment since the transactions are slower and more costly than other cryptocurrencies in circulation. This is definitely a smart investment in my opinion.
2. Are you purchasing illegal drugs?

No silk road for me. You're buying into mainstream media outlets that are skewing your perception of your average crypto owner.
3. So why are none of the major investors buying in?

They are. Again, you're letting major media outlets skew your perception. Your more mainstream major investors are looking to be less of a day trader and looking for longer-term investments. When someone has this viewpoint, they are less risk-averse and aren't really looking for investments that are so volatile.
4. Why are they saying this is just a fad and more importantly a dangerous bubble?

The same was said about the stock market exchange when it first began, and we've all seen what happened with the housing market. Cryptocurrencies are extremely volatile, and with that there are going to be major ups and downs. I do believe that there will be a bubble when we see the prices skyrocket and everyone begins to sell. Interestingly enough, they are also now selling bitcoin futures where you can bet on the burst of bitcoin, much like 'The Big Short', which is a movie I highly recommend should you be interested in learning how things are shorted.
5. What happens when government gets involved?

Well, globally speaking, governments already are involved. Japan has now made bitcoin and accepted currency in many of it's major retailers, and many small businesses have opened up their acceptance. Additionally, they are afraid of the transactions allowing complete anonymity, but it's really no different than cash being printed. Just because you put a serial number on a piece of paper doesn't mean that you can trace its every step. And we can't forget that governments don't like something that is so volatile to be in circulation, so it would need to be a currency that is equivalent to the accepted national tender.
6. But there isn't a way to 'cash out' right?

Wrong. You can treat this just like a stock exchange and buy in and cash out and anytime you want.
7. How is the value established then?

This is where simple supply vs demand economics comes in to play. There is only a finite number of coins available on the chain, so the less available coin the greater the value of a single coin.
8. So you're saying if I buy $10k worth of bitcoin right now I would be a millionaire soon?

Unfortunately no, that coin has a value greater than $10k right now. You should research some altcoins.

I would love to hear about your experiences with crypto doubters as well, so please comment away and let's all share the experiences.

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Hi, my name is Blake. I'm a true fan of the 1950's style gentleman, a father, adventurer, and all around Curious George!

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