5 Simple Ways to Explain Cryptocurrencies to Your Parents

By Staff Reporter - 15 Aug '20 10:15AM

(Photo : pixabay)

Have you ever faced the question- what is bitcoins and why the heck are they being talked about? Coming from one of your parents, just like every other time they will call you to order something for them online, you have to answer this. It is a good thing if your parents get the right idea, and actually start thinking about investing in digital currencies. As cryptocurrency itself is a vast subject you can just start by explaining the basics. Well, important things like them being online yet secure.

Let's go through 5 different ways you can use to explain cryptocurrency to your parents.

5 ways to define cryptocurrencies to your parents

1. What are cryptocurrencies?

Just like the fiat currencies, such as dollars, euros cryptocurrencies are digital currencies. These are not regulated by the bank of any regulatory bodies, but private organizations such as digital exchanges. There are over 1600 cryptocurrencies but only a few are famous. This list includes Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash, and a few others.

The cryptocurrencies come in divisions as stablecoins and altcoin as well apart from bitcoin. The stable coins are rather stable in nature Tether is one example that is backed by the US dollar. Altcoins are all the other cryptocurrencies that are not bitcoin. It can be exchanged for fiat dollars as well.

2. Where do cryptocurrencies come from?

Cryptocurrencies are mined and not printed or minted. One of the cryptocurrency is called bitcoin, but it is no physical entity. Any cryptocurrency is protected with encryptions secured with cryptography. Cryptography is nothing but a set of codes, following commands for security. They can be purchased from digital exchanges that cryptocurrencies.

As it is developed by private organizations that the government is not involved, making it decentralized. No bank int he world will agree to sell you cryptocurrencies or ever promote them. This like every other investment is prone to risks and introduces you to the volatile market of digital currencies. The fiat currencies' value rise or fall doesn't affect this technology. But what really affects it is the demand of the market and the people generated mining processes.

3. How can cryptocurrencies be used?

Cryptocurrencies can be used in multiple ways. The cryptocurrencies that you purchase can be used to make daily payments, as maximum online retailers accept crypto payment. This will help you save your fiat currency while you spend your cryptocurrencies. The cryptocurrencies can be sent overseas through the exchanges and stored in secured wallets without having to pay any exchange fee.

On the contrary, apart from the daily day to day use, cryptocurrencies can be stored for a longer period of time. The long-term investments can be treated as a retirement plan for securing funds. Since crypto is pretty much the currency of the future it serves as an asset reserve for emergencies.

You can read more about cryptocurrency investment on this article.

4. What about taxes and laws then?

Cryptocurrencies are banned in very few places, but where it is legal it has though security laws. Maximum countries have classed in under an asset hence the tax will be implied on the return on the same.

Accordion to most of the regulators' money laundering, dealing drugs, selling weapons, and other illegal activities are strictly prohibited. The exchanges that were being suspected fro wrongdoings have been subpoenaed to check their authorization processes.

5. Advantages of cryptocurrencies

All the transaction details i.e. history is kept in a pubic ledger called the blockchain (for bitcoins). This is a secure system as you can trade anonymously only using a link for paying or receiving digital currencies. These are secure channels of payment as only that person having a private key can access the digital cash. This system is also secure from the hackers, as the blocks are present in the cloud network that is encrypted with cryptography.

Conclusion

Also mention that cryptocurrencies are prone to risks but that can be dealt with unless the exchange crashes or loses the data. But, investing in bitcoins is no way a bad idea, since it comes with so many benefits. You can use profit revolution for investing in cryptocurrencies and suggest this website to your parents alike. This is a secure website and will show you the price chart of different cryptocurrencies.