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  • Decoding cryptocurrency
    • Breaking down currency
    • Buyers at Park
    • Beyond the investment

Decoding cryptocurrency

Online investing warrants safety awareness

March 21, 2019

Online currency involves risks and benefits, which causes junior Sam Sietsema to weigh the pros and cons of holding stock in cryptocurrency.

Sietsema said when investing money one should evaluate the potential risks involved.

“It makes you sort of ask yourself, ‘How much do I care about the money that I put in, like if I lose the money will that be detrimental to me?’ ‘Is the risk worth the reward?’” Sietsema said.

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Breaking down currency

Cryptocurrency’s story starts Satoshi Nakamoto’s invention of Bitcoin in 2008. According to high-frequency stock trader Craig Glicken, Bitcoin was the first successful peer-to-peer transaction, where regular people were monetarily incentivized to maintain investment legitimacy.

“A Japanese gentleman invented cryptocurrencies, and it’s a peer-to-peer transaction, which means that you can’t trace it and whoever this guy was or is, he stands to make a lot of money,” Glicken said.

Glicken said he has never invested in cryptocurrency, but such investments are riskier as they are very new and rapidly rise and fall in value.

“Cryptocurrencies are traded at the CME group or the Chicago Mercantile Exchange, and it’s on a computer system, quite honestly I have personally never traded one,” Glicken said. “Cryptocurrencies are risky securities, if you look where it was a year ago, and what they’re trading now, it was way up there and now it’s way down.”

According to Glicken, online currencies have become more commonly used in the criminal community and black market because of its anonymity and untraceable transactions.

“Cryptocurrencies have gotten popular because they can be disguised and not traced,” Glicken said. “That means that the people that trade these things are underworld people.”

Business teacher Abigail Lugo said she became aware of cryptocurrency when it first became popular as well as through her students’ questions about its relation to business.

“Cryptocurrency was a really big trend in the last five years,” Lugo said. “(I’ve learned about it) from people talking about it. (It’s) one of those things where I should know a little bit more.”

Lugo said she has noticed increased student and faculty interest in Bitcoin. However, she feels wary as larger investors have not picked up on using the expanding currency.

“There used to be the guarantee that cryptocurrency was unbreakable and at this point, I think it’s like 15 million has been stolen over cryptocurrency, so it is breakable,” Lugo said. “Then there’s this whole ‘is it valid and is it truthful’ and unless you can get some outlets to use cryptocurrency as a source of currency then it’s just going to be harder and harder for it to exist.”

According to Glicken, his experience in the stock exchange has given him insight into what it means to be investing in something reliable.

“Bitcoin has gone up to $21,000, and they are trading now under $4,000. Their value has gone down considerably,” Glicken said. “If something goes from one dollar up to $20,000 and in the last year it has come down to $4,000, that’s a get rich quick scheme, and they always work in favor of other people and not for you, and that’s a great way to lose all of your money.”

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Buyers at Park

According to senior Finnegan Reddan, his interest in investing money in corporations introduced him to cryptocurrency.

“I’ve always been into stocks,” Reddan said. “When Bitcoin really hit a huge peak like a year ago, that’s when I really heard about it. Bitcoin is a little bit different than stocks. Bitcoin’s value is dependent on who’s willing to take it.”

According to Sietsema, wanting to invest in Bitcoin involved a discussion process with his family members.

“I knew people were getting rich off of it, so we talked about putting a little bit of money together, and then we just kind of did it,” Sietsema said.

Computer science teacher Jake Utities said he understands the benefits of cryptocurrency, however he sees public opinion of these programs as most important.

“(While) cryptocurrency is a good idea, (like) all money, including the U.S. dollar, all that really matters is how the public views it,” Utities said. “When you think about our money, it’s just a piece of paper with some fancy ink on it.”

Reddan said he worries about the peak in interest in online currency and hopes to educate the community on cryptocurrency and stock investments.

“Stocks are a little easier and more dependable,” Reddan said. “There’s a lot more certainty in the stock market than there is in Bitcoin and other stuff like that.”

According to Sietsema, hearing of others’ success, his family chose to invest in Bitcoin, making sure they thought realistically about the potential outcomes.

“I knew people were getting rich off of (Bitcoin so we talked about putting a little bit of money together and then we just kind of did it,” Sietsema said. “We made sure that we were aware that something could go drastically wrong but it could also go very well, but most likely nothing happens at all.”

According to Lugo, deciding whether or not to make an investment is a personal choice that should be thought about extensively.

“It’s totally up to you and what you’re comfortable with,” Lugo said. “Investments are all about your gut feeling and your own research.”

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Beyond the investment

According to Sietsema, the popularity of cryptocurrency does not come as a surprise with trends of technological dependence increasing.

“With the way technology has been going in the past even 30 years, it only makes sense that we’ll make the jump from physical money to money that we all carry around in our phones,” Sietsema said.

Reddan believes that it is necessary to educate the general public on how the stock market and cryptocurrency works.

“You can buy currency all around the world, and I think Bitcoin is just going to be an extension of that,” Reddan said. “There’s a lot of money being made and I think it’s important to teach students and to teach our community how to understand money and how to understand how the system works.”

Reddan warns potential investors to do research before putting any money in cryptocurrency.

“Before you put money down, look into things and understand how the system works because the last thing you want to do is be putting money that could have been spent really well into just random things that you’re not necessarily informed in,” Reddan said.

Pullquote Photo

You can buy currency all around the world, and I think Bitcoin is just going to be an extension of that. There’s a lot of money being made and I think it’s important to teach students and to teach our community how to understand money and how to understand how the system works.”

— Finnegan Reddan, senior

Utities said without any standard for cryptocurrency, the form of investment lacks legitimacy.

“If it’s not tied to a government then who’s in charge of it? Who gets to determine how more goes out? I mean, without some sort of standard of what it’s worth and without public buy in, it’s really just a fad that a few people are excited about,” Utities said.

Lugo said that if demand for cryptocurrency increases, it could resurface as a more legitimate form of currency, but with the market constantly changing there is no certainty what the next big thing will be.

“In the stock market, it’s all about the buyers and the sellers. If you can find people who want to sell cryptocurrency, or want to buy it then it creates that market,” Lugo said. “But for some people they’re just hanging on to it in hopes that it becomes something, but there’s no secret solution to figure out what going to be successful or not, and I don’t think it’s necessarily an industry that people are watching right now.”

Utities said the increasing digitalization of the economy is similar to cryptocurrency.

“Really we already have our own cryptocurrency. I mean, you think about how many people actually hold cash anymore, how many people are paying with their card and now with their phone,” Utities said. “I think that the dollar is becoming cryptocurrency.”

Reddan said he is not hopeful for Bitcoin’s future based on current and past trends.

“I think either Bitcoin is going to disintegrate within itself or something new that everyone is going to like better is going to come around,” Reddan said.

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1 Comment

One Response to “Decoding cryptocurrency”

  1. Mark Anthony on March 25th, 2019 6:00 pm

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    I just didn’t know enough about it until I contacted him. The thing I like, is that he made this crypto trading easy to understand, he also mined bitcoins and some other cryptos for me after i subscribed to his daily mining investments plan. I have seen giant gains in few days more than i ever made in stocks and I will forever remain indebted to this genius because we have only worked for a couple of months and I am a millionaire already. You can ignore this message if you do not believe in the new money (cryptocurrency). Many people also doubted the internet in the early 2000 so the choice is yours. Thank you Prof. Hang, you are the best thing that happened to me, my family and friends this year. I will make you famous just as I have promised you if you come through for me and I am glad you did not fail me.

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