Have you been following crypto? It is hard to not hear about the highly volatile industry that has been dominating news headlines. With Dogecoin and Bitcoin’s plummet following remarks made by Elon Musk on "SNL" earlier this month and the whole industry crashing – or correcting – last week, then bouncing back a bit this week, it is apparent that these currencies have very unstable values. But does that make these risky assets to invest in?
Although most people have heard of cryptocurrencies like Bitcoin and Etherium, many people are hesitant to invest since there is still much speculation around crypto. On The GoGedders Podcast, we brought in three Milwaukee leaders who have been following cryptocurrencies closely: Erin Magennis is a neuroscientist and the CTO at Spree; Christopher Perceptions is the founder of PerceptForm, an end-to-end ecosystem of cryptocurrency/blockchain products and services; and Alec Shaw is a Partner of Business Development at Sperax and the co-founder of the Marquette University Blockchain Lab. Together, we can get you caught up on everything you need to know about crypto, Bitcoin, Ethereum, Dogecoin, NFTs and more!
“Cryptocurrency: We can break that down," Perceptions explained. "Crypto, paying homage to cryptography, and then currency, the movement of goods or services … so it’s just digital currency, digital money, digital value. Cryptography is an extremely secure way of encrypting information.”
Part of a reason why cryptocurrencies are so secure is because they are decentralized. Transactions are made through something called a blockchain, which is like a digital ledger, multiple computers coming together to agree on the values of the transaction. This makes all transactions direct with no middle man, making them near impossible to trace.
“(The blockchain) is not run by one central individual, it’s not run by a company, it’s not even run by a government; it’s run in this really unique, decentralized way that results in this ability for users, as well as engineers, to trust the infrastructure," Shaw said on the podcast.
"When we think of the blockchain as a database, we can think of it kind of like a giant Excel spreadsheet that we’re all looking at at the same time, but instead of being individual people, it’s actually these computers, or servers, that’s looking at it," Magennis added. "So if I wanted to go in and edit one cell and tie it to something else, which could be an NFT, everyone else would see it, too.”
All three guests seemed to agree on the safety and security of cryptocurrency transactions and the technology behind it – but how about the value and security in investing in cryptocurrencies? Will an investor see a good return on their investment, or are they just gambling it away on happenstance?
Bitcoin has earned much of its value merely by rules of supply and demand; the supply of bitcoins is finite, so people naturally want it. However strong that "want" is for the coin will influence the value. This takes any surprise out of the fact that Bitcoin’s value dropped below $40,000 following Musk’s announcement that Tesla would cease to allow the currency as a form of payment due to the negative impact of Bitcoin mining on the environment. Much of the same can be said of the highly memed currency Dogecoin, which dropped significantly in value after Musk called it "a hussle" on SNL. As scary as the volatility and articles in the news are, Erin, Alec and Christopher kept us optimistic on the podcast about the future of crypto.
“Ether – the asset that runs on Ethereum, as well as many applications built on top of Ethereum, many tokens on top of Ethereum – are actually earning fees," Shaw said. "So back when Warren Buffet says, ‘These things aren’t going to pay you anything, they aren’t going to earn you any revenue,' that is false.”
The Ethereum network has many applications that are changing the crypto-space. Ethereum took all the good things Bitcoin was doing and built on top of it something different and innovative. A major difference between the two is that Ethereum is programmable. Bitcoin is super basic in the sense that you can send X amount of Bitcoin from one individual to another. When the transaction is complete, that X amount is added to the recipient's account. With Ethereum, we have just started to scrape the surface to the possibilities and applications of smart contracts.
If you are thinking about getting into the crypto market, our guests wanted to emphasize the importance of more established coins, and buying and holding on to what you have for a longer term to make sure you see a return on your investment. They recommended holding on to your coins for a minimum of three years before trying to sell. The value will most likely continue to be highly volatile, but the overall trends have been positive sloping.
We covered tons of valuable information in this episode; please check it out if you are still curious to learn more about crypto. You can find The GoGedders Podcast on Spotify, Apple Podcasts, and Google Podcasts, or find us on our website at www.ggmm.io.