Chances are you’ve been hearing a lot lately about cryptocurrency. There certainly has been an uptick in TV advertising about this alternate form of money that is gaining momentum worldwide. Many of these ads use celebrities to tout the idea of investing in this emerging exchange. Crypto.com is the new name for what we knew as the Staples Center in Los Angeles. And maybe you’ve heard that cyber attackers often demand crypto as a form of ransom.
One cryptocurrency dealer, Voyager Digital, released a report last week that suggests that about 6 out of 10 Americans are considering investing in cryptocurrency and that 3 in 4 of the more than 6,000 surveyed say they believe that investing in this currency is a good idea.
But how much do you really know or understand about how this currency is supposed to work? Are you seeing this information and trying to make sense of it? We’re with you.
This is complicated stuff. To grasp this, you have to change your entire way of conceiving and acting on value. If you typically use an epay system – think Venmo or Google Pay or Apple Pay – then you likely are more comfortable with the vagaries of these transactions.
You perhaps can open your mind to a culture in which the currency is invisible and based more on math than on the geological elements that established the societal value that underscores our economy. This isn’t a solid gold concept.
Maybe we’ve reached an equivalent time to the Gold Rush of the 1840s that changed the national distribution of wealth and buying power. Crypto definitely refocuses our attention away from the federal gold reserve at Fort Knox.
So we thought you might have some questions we could answer. We will try. Follow closely, and we recommend you do your own follow-up research before taking any action.
What exactly is cryptocurrency?
Forbes.com recently described cryptocurrency as “a medium of exchange that is digital, encrypted and decentralized.” The dollar and the Euro are measured against the value of gold, but there is no government behind crypto. It can be used digitally to buy goods, services, stocks and, yes, even gold. In a paper in 2008, Satoshi Nakamoto described crypto as “an electronic payment system based on cryptographic proof instead of trust.” You likely have heard of Bitcoin, which was the first cryptocurrency and is sometimes called “digital gold.”
How do we know crypto actually has worth?
Read this very carefully: Everything is based on a history of exchanging the crypto – which is “mined” by the consumers when new shares are made available, perhaps a term created as an homage to a gold-based society – and that’s recorded in a “Blockchain,” which is a record of historic and provable transactions that establish value. That proof is based on computers solving algorithms that validate the transactions. How those problems are solved and how those values are determined is what makes crypto’s worth. You have to forget an ounce of gold is worth $1,848.80, as it is today. There is no gold in these hills, and you may recall that residents in Randolph County weren’t in favor of a Bitcoin “mine” there.
Is crypto available in North Carolina?
Just like buying gold, silver, diamonds or investing in the dollar, residents of North Carolina can buy and sell cryptocurrency, but they also have to pay taxes on the changes in the value of that currency. There also are laws that license dealers of the currency.
How many places actually deal in crypto?
Like any other investment system, there are those who are licensed to deal in crypto. The website buybitcoinworldwide.com lists nine outlets in the Greensboro area that deal in crypto. You simply transfer your dollars into the crypto market and invest, and you receive a return on that investment. Each dealer – like all financial advisers – has a variety of programs and investment plans. Like all commodities, some of them limit tax exposure, too. Each license in crypto requires a “money transmitter license,” which is a process managed at the state level. Many of those licenses must be bonded. North Carolina requires those licensed must document $250,000 of net worth and spend $500 to apply and $1,000 for the original license, with an additional $10 for each location, not amounting to more than $5,000.
Will cryptocurrency become part of the income you receive from your employers?
That remains to be seen, but the survey by Voyager indicates the idea is welcome among consumers. About half of those surveyed said they would like to receive about 10% of their income in alternative currency. If they already were crypto owners, they would like at least 25% of their income that way.
Who is actually buying crypto?
Younger people appear more open to crypto. Voyager found that more millennials bought crypto (41%) in 2021 than did mutual funds (23%), which is perhaps the most popular form of long-term investments. More than half of millennials said they thought crypto should be treated like any other currency. And more than 8 out of 10 said they were excited about how crypto could reduce their reliance on banks.