Don’t understand cryptocurrency? Think ‘airmiles’. You know, the premiums given out by various airlines, credit cards and other players as a reward for flying or shopping referred to as airmiles. Almost every airline gives out some form of airmiles. Airmiles are virtual. There’s nothing physical thing you can point to called an airmile. They exist in computer programs. For each airline’s airmile program there exists a formula by which you earn and use airmiles. You might have to spend a dollar on a participating credit card to earn an airmile, for example. Or, you might have to accumulate 30,000 airmiles to use airmiles to fly from New York to Chicago at no additional cost. You know the drill. Cryptocurrencies are similar. Each cryptocurrency has a specific function and value proposition.
How can something virtual have value? How do airmiles equal a trip to Chicago worth $250? Because that is its value proposition. That’s how it was set up. That’s what you get if you take the necessary actions. That is the social contract that has been set up for each individual airmile program.
Cryptocurrencies are the same. There is a cryptocurrency that is used for online gambling, one for online gaming, and even one for sports betting. There’s one which is the currency of international money transfers, one for healthcare and one for real estate. Before we’re done you will see thousands of different cryptocurrencies. We’re just getting started. Some will be valuable and worthwhile acquiring. Some will not be worthwhile at all. We, as a society, are just now learning how to use cryptocurrencies. It is only now that they are even being considered a new asset class, a new form of wealth. There are bound to be missteps and mistakes.