March 28, 2024

Teachers weigh-in on cryptocurrency trends

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Read Time:4 Minute, 33 Second

by Mary Jones

Business Editor

On Oct. 31 during the 2008 financial crisis, a message was sent under the pseudonym Satoshi Nakamoto titled “Bitcoin: a peer to peer electronic cash system.”

According to U.S News, the message contained a link to a paper that laid out the concept of Bitcoin, a new and limited decentralized digital currency. Two years later in May 2010, a Florida man traded 10,000 Bitcoins for a Papa John’s pizza order valued at $25. If that amount of Bitcoin had been kept, it would have been worth $675.82 million last November. As cryptocurrency gains popularity, students could potentially want to invest, however, there are things that they would need to know.

“I know several people that have invested and they made a little and lost a little,” said NS business teacher Layne Cook. “I actually know someone, I won’t say their name because I don’t know if they want it known or not, but they invested money years ago and they made pretty good money like enough to pay for schooling and a couple things, so several thousand dollars. But, if they would have left it in for the rest of the time, so the last year or two, they would have had hundreds of thousands of dollars.”

Although Bitcoin and other Cryptocurrencies such as Ethereum have the possibility of high gain, they are also a very high-risk investment with the values of each share fluctuating frequently and dramatically.

“If you’re investing the money for the purpose of retirement, and you’re basing your future on it, no it’s not [a good investment,]” said NS financial literacy teacher Sterling Whipple. “It has in its track record going up or down 300% in value in a month. In 2009, it was eight cents a Bitcoin and its highest value recently was I think $42,000. Now, as we go from eight cents to $42,000 in a matter of fifteen years with major spikes and troughs all throughout. It’s ill-advised to base your future retirement in something that is so volatile and unpredictable.”

Like all fiat currency, which isn’t backed by things like gold or silver, the worth of crypto is based on the trust and interest that the market gives to it causing, in part, its massive fluctuations. Since converting from a gold standard to fiat currency in 1971 under President Nixon, the US dollar is also supported by market trust. Also like digital currency, 89.8 percent of dollars in the US are solely digital without even a cash representation.

“All money is digital, you know like 98%, that’s a made-up percentage, … of the money in the world is digital, it’s just an idea,” Whipple said. “What it all boils down to is the trust of the market, how much does the market trust it? Right now Bitcoin is gaining greater trust. People are starting to trust it more and that’s all that money is, is a trust-based belief system, and so if you’re willing to put your trust in it as many, many people are, the more people who trust it the more valuable it becomes.”

The more interest the market has in crypto, the more it is worth. For some people, namely those with large net worths, market trust can be manipulated to obtain their desired selling price.

“Honestly it’s definitely trendy. The thing that is crazy about it is you see people talk about it like celebrities and stuff, and then it will jump,” Cook said. “Elon Musk has done this a couple of times, and then it will jump and then they sell, and then it’ll go back down, so it is definitely trendy.”

Although many people put their trust and dollars into crypto, its decentralized server makes it untraceable by anyone, including law enforcement, and thus perfect for the use of criminals who wish to remain undetected.

“They can’t track it, which does make Bitcoin a very exciting thing for online criminals,” Whipple said. “Any sort of deals, drug deals, dark web deals, any of that kind of stuff, is all happening through Bitcoin. My brother who runs a tech company had two or three of his clients, who are other companies who he does their tech for, all get hit with ransomware within two months and they demanded their payments in Bitcoin.” 

Due to its inability to be tracked or followed, massive amounts of crypto have been stolen causing a significant loss for many people and organizations. To Cook, the most important thing for potential investors to know is that the future of cryptocurrency is a mystery.

“I think that the biggest thing as a teacher that I would say is anybody who pretends they know about this stuff, like what it’s going to do in the future, they don’t,” Cook said. “If you do want to play around with this stuff, never use more money than what you’re willing to lose; I would pretend like you would take whatever you put in there like if it’s $100, I would pretend that you just burned that money in front of yourself and then invest it. If you make money, great, but assume that you just burned your money because that’s more likely in my opinion with this stuff than actually making money.”

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