By: Miles Reeves
At Bitcoin's peak valuation of $69,000 in November of 2021, its total market value made it the third-largest currency in the world. Moreover, Bitcoin (BTC) was only 42% of the total cryptocurrency value at that point in time. Despite recent price pullbacks, there is no doubt that crypto is here to stay.
Blockchains are systems of independent computers that autonomously work together to process and record transactions. They have a variety of applications from currency to lending and provide an alternative to conventional financial systems. If I send someone five dollars of BTC, that transaction travels through a network of computers that confirm and document it. When this money arrives in the recipient’s wallet, it can only be traced back so far as its most recent stop along the blockchain.
This system harnesses automation to remove the need for paid third parties like Western Union, Paypal, and clearinghouses. The operator of a computer in a blockchain can’t see the origin or amount of transactions, they just see lines of code. In addition, it decentralizes the exchange of value. No one person, company, or government controls a blockchain.
While Bitcoin is both a currency and a blockchain, it is important to distinguish between the two. A blockchain is like a railroad, and a currency/token is like a rail car. Bitcoin has its own railroad, and a single railcar on this network known as a BTC. Ethereum on the other hand, has its own network, a primary token on this network known as ETH, but also hosts thousands of other coins on its blockchain.
Crypto is often seen as an investment rather than a form of payment. However, Stuart Larkins, co-founder of Chicago Ventures, warns that, unlike currencies and stocks, there is no collateral. He suggests doing research and investing in large coins and blockchains that have practical applications. He warns to stay away from coins with no utility and “wouldn’t touch DogeCoin with a ten-foot pole.”
Davian Barber is a junior at Jones College Prep who has been investing in Bitcoin since 2018. When he first bought Bitcoin, his coins were stored on an encrypted hard drive. Now, he explains, it is easier for kids to invest in cryptocurrency through established online brokers like Coinbase and Crypto.com. Whether you’re an investor, a programmer, or an artist, the blockchain is full of opportunities—and there’s no reason kids can’t be involved.
*I am not a financial advisor. This is not financial advice.