A big emerging trend recently, cryptocurrency and crypto trade has taken the media by storm. What exactly is this risky business? Let's dive into what makes cryptocurrency so appealing, especially to college students.
The Basics: Cryptocurrency
The goal of many college students today is to make money by working smarter and not harder. In order to do that students have begun to find quick and often risky ways to acquire funds, such as investing in cryptocurrency. Some students have even taken it upon themselves to invest their student loans into crypto. Cryptocurrency is a form of currency (often digital) that exists on a decentralized ledger, that various people have access to. There are various forms of digital currencies, the first being Bitcoin. Most of these digital currencies were created to provide a stable and reliable form of currency that is not controlled or tainted by the government. The key to maintaining this reliable currency is the decentralized ledger. The ledger is open and accessible to various people and oftentimes there is a cap on the amount of currency that can and will be distributed. Though Bitcoin was the first, over these past ten years, there have been various forms of crypto developed, these are often referred to as altcoins.
How Does CryptoCurrency Work?
Over the past few weeks I have been seeing various articles about the rise of crypto, it seems very promising and relatively accessible. So I decided to try it out. There are many different platforms that you can invest in crypto on, one of the most popular and reliable being Coinbase. When attempting to create my own Coinbase account, it took me through a process of inputting my own personal information for security purposes, but also for the sake of their own ability to track the currency. Most of the cryptocurrencies have a decentralized ledger that tracks every transaction so that they are aware of how much is left and where the currency is circulating. It is almost as if every dollar bill in the U.S had a tracker on it. I got a bit impatient with Coinbase and didn't really feel comfortable with giving out all of my personalized information, so I decided to go through another source, Cash App. Cash App only has access to Bitcoin, so I wasn’t able to invest in any other forms of crypto. When you access Bitcoin through a cash app, you are able to see the equivalent between the dollar amount and one Bitcoin. As of now, one Bitcoin is worth $57,308.30 USD. I decided to invest $20 of my own money just to see how it would work out in a week's time.
Should I Invest In Cryptocurrency? What Are The Risks?
Though I invested a small amount, I took a small hit. I lost nearly 40 cents in a week's time and I’m projected to lose more. There are other forms of crypto that seem to be taking off at a faster rate right now, but it is still risky. Cryptocurrency is definitely becoming more and more relevant, people can now purchase things with it. Many money moguls and innovative individuals such as Elon Musk are in on it as well. However, even Musk says that Bitcoin is promising but he warns people to proceed with caution. Just like investing in stocks, it is not always guaranteed that you will receive an increase in your return. So please proceed with caution, do your own research and please, please please, do not invest all of your student loans into one entity!
Author:
Tatiana Howell
Bobcat Financial Coach, Financial Wellness Center
Tatiana is currently a first-year majoring in Sociology at the University of California, Merced. Read more about her here!
