Crypto, Crypto, Crypto!
Cryptocurrency is on the lips of many pundits today. While most people don’t like to admit it, crypto is not commonly understood. That is because cryptocurrencies are built on two concepts that people use interchangeably: (1) a blockchain…
Published June 14, 2021 · 1 min read
Cryptocurrency is on the lips of many pundits today. While most people don’t like to admit it, crypto is not commonly understood. That is because cryptocurrencies are built on two concepts that people use interchangeably: (1) a blockchain and (2) a token.
Blockchains and Tokens
A blockchain is a chain of code that acts as a digital record of ownership. A token is a digital name for the underlying blockchain—Bitcoin, Dogecoin, and Etherium are examples of tokens. All cryptocurrencies are built on a blockchain that tracks the transfer of ownership from one person to the next.
The Risk of Crypto
There are many arguments for and against cryptocurrency, but the most important argument is that crypto is risky—arbitrary, wild swings in its value make it an unsound investment for many traditional investors. If you’re considering an investment in crypto, you should first make sure you have a financial plan that you use as a check and balance against over-allocation and then you should make sure that it aligns with your risk tolerance—most people cannot stomach wild swings.