Cryptocurrencies - an Overview and Opinion on the industry at large

There are no Actual Coins.

This post is part of a series I’m writing at the request of a few of my clients that will attempt to explain and demystify emerging tech in a way that can be read and understood by people that want to know but might not have the time or energy to learn the various concepts that underpin said technologies.

Brevity has never been my strong point, but I will endeavour to see this through! If you have questions about emerging tech and would like my explanation or your own questions answered — drop it in the comments and I’d be happy to write what I know or point you to somebody who does!

Quick Links

  1. Definition of Key Terms
  2. Cryptocurrency explained in one breath
  3. Why do you need to give this any thought?
  4. Common Objections — Addressed
  5. Common Fanboy Myths — Debunked
  6. Sum it Up — Where’s the Opportunity

Intro

Firstly, I am not attempting to frame myself as an expert on all things crypto. I’m quite certain that the things I don’t know vastly outstrip the things I do. So if you read this and find something you know to be demonstrably false, or even just have a hot take of your own, please leave a comment and let’s have an open chat about it. I’m receptive to new data and taking notes. I have been tracking its progress and keeping the pulse of it since ’09, however, so hopefully I’m not the last to know and somebody benefits from this!

Back in ’09, I was living in China and one of my friends brought over what was, I was to learn, likely one of the first dedicated mining rigs ever made. We sat down over a pint of zha pi outside and talked it out. He was sure this was going to be A BIG DEAL. I talked him out of it. Sorry, mate.

While I am overall Crypto Positive, I still say Bitcoin is certified 🎠💩.

I am confident that it will eventually buckle under its own weight, I just thought it would’ve happened ten years ago already. Read on for my reasons.

Definition of Key Terms

Here are the key terms you need to know:

  • Cryptocurrency — A type of currency that’s digital and decentralized. Cryptocurrency can be used to buy and sell things, or as a long-term store of value.
  • Coin — A representative store of digital value that lives on a given blockchain or cryptocurrency network. Some blockchains have the same name for both the network and the coin, like Bitcoin. Others can have different names for each, like the Stellar blockchain, which has a native coin called Lumen.
  • Blockchain — A digital form of record keeping, and the underlying technology behind cryptocurrencies. A blockchain is the result of sequential blocks that build upon one another, creating a permanent and unchangeable ledger of transactions (or other data).
  • Wallet — A place to store your cryptocurrency holdings. Many exchanges offer digital wallets. Wallets may be hot (online, software-based) or cold (offline, usually on a device).
  • Smart Contract — An algorithmic program that enacts the terms of a contract automatically based on its code. One of the main value propositions of the Ethereum network is its ability to execute smart contracts.
  • Non-fungible Tokens (NFTs) — Non-fungible tokens are units of value used to represent the ownership of unique digital items like art or collectibles. NFTs are most often held on the Ethereum blockchain.
  • Decentralized Autonomous Organization (DAO) — Open source and decentralized systems that do not require centralized operators or controllers.

If you find yourself reading about crypto and hit lingo you don’t know, refer to this A-Z glossary of terms for assistance:

https://know.plains.digital/article/cryptocurrency-glossary-of-terms

Elevator Explanation

Cryptocurrencies are a type of currency developed 100% digitally, that use a new type of program\network called the “blockchain”. They offer the advantage of not being connected to any government body or physical good (like Gold) so they can be traded freely, without oversight or taxation from anybody.

Why You Should Give A 💩

It’s here, it’s happening, it’s literally taking down governments. With hundreds of billions of dollars made, lost, and invested already — and Venture Capital from around the world pouring in to companies working with it at record rates, the technology isn’t going anywhere. As a business owner, you need to at least keep an eye on this as it develops, like you already do the stock market, industry reports, and other Financial data that helps inform your strategy and decision making.

Cryptocurrency Commonly Heard Objections

This sounds like total horse shit to me.
I know it does. Seriously, I’m with you. There’s plenty that smells, too. Dogecoin. A dozen others that have risen only to disappear. Early stage, unregulated environment. It’s like the Wild West in the Gold Rush. However, whether or not cryptocurrencies succeed or fail in the end no longer matters. There’s too much investment from large corporations, VC, and the everyman for Bitcoin to simply disappear, at this point. You can already use it to purchase just about anything you could imagine, so it’s just as real as any other currency being used online right now.

Crypto is only used to launder money for criminal organisations.
Not anymore. A lot of money from questionable sources has definitely been funneled through it, and a lot more probably will be down the road, but not as much as -say- the USD. Various forms of Crypto are widely usable for any number for legitimate products and services, right now — and that trend will only see continued growth in 2022.

Crypto is not backed on a real (fiat) currency, so it’s totally made up!
Fiat currency, itself, is not backed by any measure beyond our willingness to accept it. Crypto is no different. If our countries fiat currencies were still backed on the Gold Standard or Pound Sterling, or even the USD, then this argument might carry weight, but existing money is just as made up as crypto, it’s value is only as high as we accept it to be.

Crypto is useless. It does nothing.
Don’t confuse all crypto with Bitcoin. Bitcoin is useless, and does nothing, just like a real coin — this is true. However, most other cryptocurrencies currently being developed offer some sort of usable feature to help solidify and even increase their inherent value. Ethereum, the largest competitor to Bitcoin, is not just a new type of money, it’s a platform to build new apps and experiences on. This is where the value of crypto lies that most people don’t see.

Crypto uses a crazy amount of Energy, that can’t be worth it.
Can’t argue this point, it’s true. Cryptocurrency mining and trading currently uses more energy (and thus creates more pollution) than a number of ENTIRE countries combined. A single transaction using bitcoin currently takes 1173kWh…that’s too much. For comparison, that’s like a months worth of power in Saskatchewan in the winter. It’s got so bad in Kazakhstan (couple with failures at the highest levels of their government) that its crippled their power grid and their attempt to stop all mining has resulted in worsening protests, and foreign boots on the ground. Yikes!

Cryptocurrency Propaganda — This is what the Fanboys are saying

Crypto is going to Free us from the oppression of government backed money! If you don’t like Crypto, you don’t like Freedom! FREEDOM!
Crypto still needs power to operate and while great inroads have been made in both sustainable energy production AND in crypto that is more efficient, it’s still requires .6% of all Global energy production, and rising. That’s going to require the acceptance of both government and industry to sustain. China and Kazakhstan (who were the largest centres for mining operations) have already kicked it off their grid. Other countries will follow when it becomes the burden it was there.

Bitcoin uses power, sure, but it’s so valuable — it will start to generate more power than it consumes soon, and some of that will be renewable!
This is the “trickle down economics” defense of the Bitcoin world, and I think we’ve all been through too much 🎠💩 to still pretend THAT’s real.

Bitcoin lets the average person be a BILLIONARE! It’s an equalizer!
I’ve got some oceanfront property in Regina, Sk for these guys. Some people have made billions from nothing on crypto, yes. Most people lose money, and the bulk of the profits are still going to the VC firms that fund it, sorry.

Let’s Sum This Up. Where’s the Opportunity?

Magic ball time. Just like I knew mp3’s would disrupt the music industry before Napster was released (yes, I’m that old) I am going to tell you 3 things that will happen, probably all in 2022.

  1. Bitcoin will survive, and continue to be a Gamble. It’ll rise and fall and rise again, but eventually — once the larger blockchain ecosystem is established, die in a series of spectacular crashes that will be hard to watch for some, schadenfreude for others. It’s ok to laugh if you didn’t buy in, but be gentle, people will lose their businesses, their savings, their homes, everything. That’s never fun. That’s ONE why there’s regulation on money.
  2. NFT’s will come into their own and create a trillion dollar industry that starts THIS year. … Yes, the stupid picture files that people are paying millions for, those NFTs! Yes, those are ridiculous, but those aren’t the POINT of the technology at all, they’re just a BASIC use case for the smart contract technology that underpins them. I will create a separate post that goes into more detail on this, one that you may want to stick around for.
    THIS IS YOUR HOT TIP FOR THE DECADE.
  3. The Fun Police (and, like, the real Police) will step in. 2022 will be the year that sees major countries like the US and Canada take their first stabs at regulating this financial industry. As soon as that happens, the big money funding it will throw a party, as that will allow their official banks in the door and then the explosive growth you’ve seen in this space already will be remembered fondly as the “early adopter” period, and this industry will dominate growth in the economy for the rest of the decade.

(Bonus #4) the age of the Dao could be upon us. Not ready to call that yet, but it’s a maybe and that could be very, very exciting. No idea what I’m on about? Stay tuned for future posts, or reach out. Happy to yap, Happy to deliver detailed and actionable presentations to leadership teams about this and any other digital landscape. That’s what I do! Reach out.

If you enjoyed this content, obviously please like, comment, share, bookmark, call me, tell your mom, and all that. If you’re eager to dive into everything Blockchain and NFT — great! Get into it! RIGHT NOW, like any high risk investment, be prepared to lose whatever you put into it.

If you want a sure bet NFT, consider the link below, it’s gonna be huge if you can get it in time. It’s on DeSo, which is a platform trying to decentralize social media applications. It’s well funded and gaining traction…

(I am kidding, there are no sure bets and this sure wouldn’t be one of them. By all means, however, prove me wrong and buy it today! 😉)

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Digital Transformation Specialist. Buzzwordsmith, too. You need to get something done online, let me know? If I can't do it - I know who can and who should

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JD Michell

JD Michell

Digital Transformation Specialist. Buzzwordsmith, too. You need to get something done online, let me know? If I can't do it - I know who can and who should

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