April is Financial Literacy Month – Let’s Learn About Crypto!

April is Financial Literacy Month – Let’s Learn About Crypto!

You may have noticed a new question come up this year when you sat down with your tax pro Did they ask you if you bought or sold any digital currencies in 2020? The IRS is asking because the last few years the reality of digital currency has become more and more available to Jane Q. Public. Millionaries emerged from millennials that took a few $100 back in early 2010 and socked it away into this dark net quantum monetary token called “Bitcoin”.

If that last bit sounds a little like “mumbo jumbo” to you, don’t worry. It took me months of watching YouTube “experts” and listening to Robert Kiyosaki and Gary Gensler and others to strengthen my grasp on this concept of “digital money” and I barely understand the surface concepts. I wish I knew years ago what little I know now. In the spirit of Financial Literacy Month – here is my experiential journey into the realm of crypto currency.

My First Bitcoin…

Back in 2016 or so, I had ordered some plants thru a nursery connection in Thailand a friend recommended. They completed all transactions online in Bitcoin, or through a local bank transfer. I love Thailand, but going in person to a Thai bank was a bit unfeasible from my home in Atlanta, GA. At that time I had heard of these “coins” but hadn’t actually used them before. The nursery dealt with many “traditionally banked clients” and was able to point me to an online exchange. So I went online and deposited $100 USD from my bank debit card into this online wallet. Mind you, Bitcoin was trading at about $650 per coin, so I can’t even say I ever owned a whole coin.

Had I understood more about what digital currency was, I would have deposited a bit more into that online wallet. Alas, I was a noob. It took 3 days to send my normal money via debit card to the online exchange. Traditional banks seem to be the lagging point in digital transactions ironically. However, once the money was deposited in my “wallet” the rest of the transaction and confirmation from the nursery took minutes. Due to exchange rates between USD/Thai Baht/Bitcoin always fluctuating, a small fraction of a bitcoin was left in that wallet, forgotten.

Bitcoin Today…

I didn’t follow the dips and huge trenches even, but bitcoin and the digital currency world has grown and grown exponentially since then. Bitcoin was just the beginning. Today there are hundreds of coins and tokens traded on the blockchain digital space. In 2020, amidst a global pandemic, bitcoin started to trend on social media and in the news again. I got intrigued. Prices were hovering around $35,000 per coin, and I knew I had left some in that wallet way back 5 years ago. So I found my login info and opened up that old wallet. 

I had left only .00017 BTC, a fraction of a coin, you would have thought it worthless to even look it up. 

My little tiny seed of a coin had blossomed to $47 USD!!!

I was telling my niece and nephew about this crazy thing that happened and we had a crazy idea. We thought of how much I would have today if I had bought just one whole coin back in 2016 for $650. If I had just 1 coin, at the time of this writing I would have $58,000.00! I also let them know just as easily as I “made” that huge amount of money, I could also lose everything if that coin becomes $0. 

Turning Experience Into Education…

However, the idea that $1 could be come $1,000 was still worth exploring. So we took a quick dive into crypto currency as a mini-lesson in our homeschool adventure. Here is what we learned, super simplified. I don’t want to bore you with the mundane financial details and inner workings of the monetary system. For more current news, I recommend Crypto Eri for snippets and ongoing updates, and here is a good overview from Robert Kiyosaki

Currency in the simplest terms is anything you can trade for goods. Every civilization had some form of currency. 

Keeping all the different currencies straight and knowing who had or was owed what became an ordeal the more and more the world population grew. Somehow, systems needed to be put in place to keep track of it all. One the earliest forms of “banking” started in Italy, as so many creative ventures did. As the idea of traveling and trading with more and more countries emerged so did the need to have a centralized measure of value as well as ease of payment. Imagine a hundred villages all using different baubles and gems and goats as payment. Now imagine bundling those “currency” items to somehow take them across the river to trade. There had to be an easier way…

Evolution of the Monetary System (Super Simplified and Brief)…

Enter the Medici family, possibly the richest family in the known world during the Renaissance Era. The Medici name is prevalent in history, but little is told about how they essentially became the first “bank”. They would write notes in exchange for goods so you could then take those notes and easily put it in your pocket and go on your way. The notes would then be used in some other village or country, accepted by all as everyone who was anyone knew the Medici’s paid their debts. This ease of exchange became popular and the idea of central banking was born. Of course, the bank takes their fee for facilitating your transactions.

As this idea of “banking” emerged, standardized commodities helped form the basis of value of currencies around the world. This currency standard was less variable and relatively stable against other countries. Commodities, like Gold, are traded worldwide, so the per ounce price of Gold was similar among equally industrialized nations. Unless there is a huge spike in demand for gold of course. In which case gold backed dollars become more valuable. The United States dollar was based on the Gold Standard from around 1880 until the Nixon years.

Since the mid 1970s, we have been using what is termed “fiat money”. Fiat in this case has nothing to do with Fiat cars. Instead, this “fiat” comes from the Latin meaning “let it be done”. It relates to the monarchy (or government type entity) vouching for the value of said currency and setting value. In the case of a United States Dollar (USD), it is a piece of paper which the US Federal Reserve promises to “pay” the bearer a specified value. Fiat is a declared value, not based on hard goods. The fiat system was popular until about the early 2000s, until the Great Recession hit and weaknesses of that system became apparent. Economists have debated about going back to the Gold Standard or staying with Fiat, but so far we are still on a Fiat system.

Enter the Blockchain Era of Digital Currency…

Thru the last century traditional money has had it’s flaws. Bank transactions can fail, paper dollars can be counterfeited, airport exchanges do not carry all currencies on hand, and more. The need for a better way continued to emerge…

So here we are today with the next iteration of “money” – where technology makes a digital medium of exchange on the “blockchain” system possible. The exchange of “coins” are recorded and encrypted in the blockchain digital space. Blockchain is transparent – peers can “see” transactions and verify and keep all ledgers in sync. “Keepers of the Blockchain” are ledger administrators who facilitate transactions. Cryptography encoded private and public keys become your “wallet” to hold and trade crypto currency. These transactions are almost instantaneous and secure, virtually unable to be hacked or counterfeited. The data cannot be altered, human error is almost non-existent. 

It took a few years, but the idea is quickly catching on. Companies like Walmart are accepting crypto currencies as payment. Some give employees the option to receive their pay in crypto currencies. Paypal and Chase Bank have added crypto to their online platforms. The idea that Bitcoin is just some goofy internet fun money has morphed into the understanding that crypto is here to stay.

So What Does All That Mean Now?

If you’re still reading, I salute you! This isn’t exciting unless you’re a nerd like me haha!

My niece and nephew however were still just wanting to know one thing — how can they turn a small seed coin into a giant beanstalk of money? Will cypto work that “magically” again?

That of course, unless anyone has a looking glass handy, we don’t know exactly. There are over 100 different coins and tokens on the market today. Bitcoin is the highest value, but a handful of others have the potential to skyrocket to 5 figures as well, or tumble and fall off the map entirely.

So we took some “fun money” to throw in the crypto market and see what happens. I set aside about $15 for each of them, and split it up among 3 coins. I wanted to get something we could have whole coins in, not mini-fractions like my original 0.00017 BTC. 

Still having no idea how these coins actually “grow” I decided to look to better experienced experts than myself. So I listened to Crypto Eri, Elon Musk, and a few others and landed on these super low entry point coins: XRP, DOGE, and ZIL.

What Coins Did We Get With Our “Fun Money”?

XRP – This one is backed by a company called Ripple, Inc. and used worldwide. However, they are also in a current SEC hearing in the US so XRP could be eliminated if the judge decides it isn’t a “currency”. Fingers crossed it remains a currency as it has been the last decade.

DOGE – This was created completely as a joke and named after the beautiful Shiba Inu pup. Thanks to “meme phenomena” DOGE may become the currency of Mars. You know, when we arrive there via SpaceX Buses and Elon’s favorite coin is abundantly used.

ZIL – This one’s name sounds like Tequila, so we bought it! Really, I know nothing about it. Other than is is mined in an economic and socially responsible process, unlike Bitcoin and other older tokens.

All were under $1 per coin, so we were able to get a few dozen coins with the $15 USD I gave each of them. They are super excited to see how their venture grows. We plan on taking a gap year trip for a few months over the summer as each graduates school. Who knows, in 5-10 years these little seeds could make for an amazing world tour!

A Little Context and Updates…

By comparison, if I had put $15 into Bitcoin back in 2011 when it was $13.80 per coin I would be sitting on about $70,000.00 today. 10 years to turn $15 into $70k is pretty phenomenal! Of course, it could also go the way of the Beanie Babies and we could have exactly $3 left in 10 years as well. We shall see, shant we?

Update as of this writing on April 5, 2021:

Bought $4.47 USD worth of XRP @ $.44 each on March 2, 2021.   Worth $8.66 – WOW!

Bought $5.16 USD worth of DOGE @ $.05 each on March 2, 2021.  Worth $5.93 – not bad!

Bought $1.20 USD worth of ZIL @ $0.12 each on March 3rd, 2021.  Worth $2.15 – another WOW!

Right now has been a good strong bull run on Crypto for a few months now. So these returns in such a short time are not indicative of long term expectations. Like Elon says, don’t put your life savings in crypto.

Jeanne Hutchinson

Jeanne moved to Loveland in 5th grade from Michigan and graduated from Loveland High before joining the ARMY as a medic. Colorado has always been “home”, so she was excited to return in 2016 after almost 20 years as a nomad. After the military she was blessed with a job that allowed her to travel the world - seeing 26 countries in just a few years. Having that world perspective really solidified for her how blessed we are and to always strive to see the positive aspects not just of life, but also in the hearts of everyone around us. Equipped with not only the gritty real life experiences of the military, she is has a degree in Psychology and is a Certified Financial Educator who has worked in corporate as well as entrepreneurial roles. We are all connected and deserving of love and success. Jeanne has made it part of her mission in life to spread joy, help others navigate the challenges of life, and edify other women to believe in themselves and create the life they dream of.

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