If you are interested in the technical side, please note that there are many smarter people than me who have written better guides regarding this topic. You may start here. These are my personal ideas which I want to share because so many of my friends got interested and ask me the same questions. No inner, dark motivations involved.
OMPstands for old market people, that is people who invested in the market long time ago; also called
YMPis the contrary of
OMP; also referred as
crypto-moneyis the category of crypto currencies so famous and trendy today. It consists of litecoin, ethereum, bitcoin …
shitcoinis a type of
crypto-moneymade to be a scam, ponzi scheme, bubble, with no value
goodcoinis the contrary of
blockchainis the list of transactions made with a coin. It is like a book with all the trades.
volatilitythe rate of which a price of an asset changes. High volatility means that the price changes greatly in a short amount of time; low volatility means the price stays the same over a long period of time.
What it is?
- decentralized: there is no single power who owns it
- virtual: it is not tangible (you buy/sell via the internet)
- secure: it is safe to assume that if I send you 10 BTC, you actually receive 10 BTC and I had at least 10 BTC before sending them
- peer-to-peer: there are no intermediaries in between
- currency: a way of buying/selling stuff
Can I make money?
Can I lose money?
Wait, how is it possible I can both make money and lose some?
shitcoin, you lose money. You use
goodcoin you make money. The difficulty relies in finding the
Is it a bubble?
No one can tell. By definition bubbles grow and burst without anyone noticing it (otherwise we call it investments). There are two ways of answering this question:
crypto-money is in a bubble: yes, has been and will be because there are so-called market cycles through which people get interested, buy assets, while
oldssell because of the gains. If there are many people suddenly interested in the same asset, then this asset will grow exponentially. That period of time is a bubble, and eventually it will burst. Look at the charts of crypto-money price since 2014: it has at least a dozen on bubbles. Look at the 2017 chart: at least 5 (the last happened in December).
crypto-money is a bubble: no, because there is real value behind it. Bubbles burst because there is no intrinsic value behind the asset. Holland tulip-mania (not comparable with today’s market but many people do the comparison anyway) burst mainly because
- you buy 100 tulips for your wife each week
- she gets tired
- you buy less
- you buy less and less
- however the market is full of those tulips (because people used to buy them, so they have been produced in gargantuan quantities)
- what can a market do with so much of the asset and nobody will buy it? You know how it ends.
- it’s a means of payment, it’s not a stuff
- does not expire in a few days
- has intrinsic value: name a currency you can send fast (< few minutes) from Italy to Japan, safely, freely with little (< 1%) transaction costs.
Why should I use
crypto-money to buy stuff?
- Do you trust banks?
- Do you know how banks use your money?
- Do you know if the software your banks use is safe?
- Do you know how much money banks print?
- Do you know why dollar lost so much of the value between 1950s and today?
If you answer
NO more than 3 times, than you should ask yourself
Why do I buy stuff with €, $, £ (or whatever fiat currency I use).
Wait, but isn’t
crypto-money used by virus hacker, mafia, gangster and bad people?
€, $, £ … Money is money. If the current economy was based on goat-trading, then you would see mafia guys carrying goats in their cars.
I understand it’s good for the people, but is it good that everyone can see my transactions?
- Not all coins have a public
blockchain: you can use them if you want to upgrade to Pornhub PRO, without everyone noticing
- Do you think your transactions are secure and private now? Do you really think that since you are with
Bank B, which is affiliate with
Bank A, cannot see your transactions? How much do you think a hacker can earn in exchange of your list of Amazon purchases? Or do you really thinks your accounts are so safe, now one can see what you do?
Yeah, I know that my accounts are not safe, but better keep hidden stuff anyway right?
This is a frequent problem in computer science. It is commonly address by the name security through obscurity: basically you hide your stuff hoping nobody can find it.
Actually, the situation is very simple: no matter how hard you can try hiding your stuff, since you hid it, then there is a way of un-hiding it. Be it torturing you, be it knowing you so that I can know all your secret places, be it brute-searching your house. It is the same with software: there is so many software that cannot be seen by the public, that is kept hidden and edited only by the company that produces it.
Since there is always someone smarter than you, somebody finds a bug in the software and exploits it, without you even noticing. Even in the 50s, 60s it was unthinkable of software companies to publish their code on-line so that everyone can see it. Nowadays? Companies prefer programmers who work on open-source projects. Keeping things open is a smart way of dealing with problems. And if you think your team only can solve all your problems and bugs, better than the whole world, maybe you are a bit too egocentric.
Since their software is so secure and bullet-proof, why not banks open-source their software? Is it really efficient? Why not make the whole world code a better software?
Until the 1900s mathematics was considered a secret art: if you found a great theorem you should have kept its discovery secret. People killed for theorems. People died protecting them. It was a mistake. Around the 1900s mathematicians started creating groups, clubs so as to collectively concentrate on mathematics most difficult problems. So did the physics guys and the chemicals guys: basically all the science geeks started being socials and sharing their knowledge with everybody. The result? The progress of mathematics since the 1900s has been astonishing. Because, to be frank, what purpose hiding your discoveries from another human being serve? Pride? Success?
So, let me summarize: you hate banks, you like public-safe transactions, why not all merchants use this
As of now, it is a small market, so there is
high volatility: if you have a small business you may benefit one day and lose the next. On the other hand if your business has a research&development team you may suggest them try out
blockchain solutions. Always remember that this is a revolution that has started not so long ago: be safe and try not to make a lot of money.