Lately, it feels like crypto is everywhere. Celebrities are tweeting about it and people are becoming millionaires from it. But just because crypto is becoming more mainstream, doesn't mean it is easy to understand.
To help navigate, HelloGiggles spoke to four female experts in the crypto space—ranging from a TikToker to a certified financial planner—to get answers to our burning crypto questions.
What is crypto?
Cryptocurrency is a digital currency. Unlike a dollar bill, crypto isn't tangible money you can stuff in your wallet or feed into a vending machine. Instead, crypto exists entirely online and is built on a technology called the blockchain, a distributed ledger technology (DLT.)
While this can sound a bit abstract, Lavinia Osbourne, the founder and host of Women in Blockchain Talks, uses more familiar technology tools as an analogy. "When you send an email, you need the internet. If the internet's not functioning, you can write that email, but can't send it. Same thing with crypto and blockchain: you need the technology to send it," she explains.
Another major difference between crypto and traditional currency? Crypto is decentralized, meaning it isn't overseen by a government or bank. Instead, crypto transactions are sent out and confirmed by a blockchain's network, or nodes.
"Blockchain is going out to different nodes and all of those nodes verify the information. What that creates is transparency, trackability, traceability, and open source decentralization, because it's not one central figure," Osbourne says.
How many cryptocurrencies are there?
According to Lauren Anastasio, a certified financial planner at SoFi, there are literally thousands of cryptocurrencies. If that sounds overwhelming (how could it not?!), it can help to familiarize yourself with the two major crypto categories: Bitcoin and altcoin.
Bitcoin is perhaps the most recognizable cryptocurrency, in part, as Osbourne explains, because it has been around the longest, first launching in 2009. "Bitcoin is popular because it was first: it's the granddaddy," she explains. "Everything outside of Bitcoin is an altcoin: an alternative coin to Bitcoin."
Another big name in the crypto space is Ethereum. Ethereum is well-known because, in addition to having its own cryptocurrency called Ether, many other types of digital currency that don't have their own blockchain are built on Ethereum's. These are called tokens.
Maggie Love, the founder of the womxn-focused decentralized finance education program SheFi, explains the difference between crypto and tokens another way: "Tokens exist on top of an existing blockchain, but a cryptocurrency has its own blockchain."
How to get into cryptocurrency?
Crypto Wendy O, who shares crypto news and educational videos on TikTok, answers this question with another question. "'When you order something from Amazon, do you look at the reviews?'" she asks. "People should do the same thing when they're investing in cryptocurrency; they should understand the basics: what this thing does, why it's important, the utility."
And while you can refer to websites like CryptoSlate and CoinMarketCap for detailed crypto pricing information and rankings, Osbourne recommends looking into a crypto's background to better understand why it was created and whether it aligns with your values. "Behind every coin, there's generally a premise: a purpose, social impact, or social justice. It's not just been created to make people money," Osbourne explains.
Fortunately, for as many types of crypto that exist, there is an equally impressive number of resources investors can turn to. If you learn by reading, websites like A16z's Crypto Cannon provide an extensive index of articles and other resources. Visual learners can turn to crypto YouTube channels like Finematics, while those who prefer listening can subscribe to podcasts. (Love recommends Bankless and Unchained, while Osbourne hosts Women In Blockchain Talks!) You can even bulk up your social feeds with follows like the accounts run by @shefi_crypto and @cryptowendyo.
But with a never-ending stream of education and resources, how are you supposed to know when you are ready to start investing? Wendy tells HelloGiggles that the research process and the investment process don't always have to be completely separate. "There's no reason why you can't do both, but you should understand the basics of what you're investing in," she says. "I do think it's okay to kind of jump in headfirst, but at the same time, you can't expect crazy gains if you're not too sure what you're doing. Education is always key."
How to buy cryptocurrency:
The process starts with setting up an exchange account, AKA the place where you will exchange your fiat (or traditional) currency for crypto. Many exchanges also function as virtual wallets where you can store your crypto. And yes, that is wallets—plural—because, unlike a physical wallet, you can't keep different types of currency in the same wallet.
While there are plenty of options out there, you'll want to make sure you trust the exchange you choose and feel comfortable with how it is set up. "I always say go with the ones that the mainstream knows if you are starting out for the first time," Osbourne recommends, noting sites like Coinbase, Crypto.com, Kraken, eToro, or Gemini.
Most exchanges require you to provide identification information and complete verification requirements. Then, you can connect the account with your bank or other payment methods. Once your account is approved, you are ready to purchase crypto.
How to invest in cryptocurrency:
Not sure what to invest in or how much to invest? Start out small. "The good thing about crypto is you can put a little bit of money in; you don't have to buy a whole Bitcoin or a whole Ether," Love explains. "You can put $10 in, $100, et cetera."
Both Osbourne and Wendy recommend dollar-cost averaging, a strategy that seeks to balance out the dramatic upward and downward swings that crypto can be prone to by investing over time. For you, this might look like purchasing $5 or $10 worth of crypto each month.
"Dollar-cost averaging is a very good way of getting started in a safe and effective way," says Osbourne. "As you do that, you could continue to learn [and] lookup the different coins. As you get more confident, start investing in those."
How risky is cryptocurrency?
There is no sugar-coating it: crypto is risky. Investing in crypto is different from other types of investments due in part to differences in regulation and crypto's tendency to fluctuate based on buzz (or Tweets).
Because of these factors, Anastasio notes crypto may not be the best choice for brand new investors, or for those who are particularly nervous about the risk involved. "Those who do choose to invest in crypto should only invest amounts they're willing to lose," she says.
Wendy echoes this. "Don't assume that just because you bought a particular cryptocurrency, it's going to make you rich. The project might not be here in six months from now."
Osbourne, too, acknowledges the risk of investing in crypto, but notes that the process in and of itself is a learning opportunity—even if it doesn't end up with a monetary gain. "Investing is a responsibility of learning," she says. "You have to understand what you're investing in, why you're investing in it, how much you have to invest [and] what you're risking to lose, because you aren't going to lose. It's called failing forward; as you fail forward, you're going to grow in knowledge and understanding."
Whatever your risk tolerance, it's important to remember to review the IRS guidelines on virtual currencies. "Crypto investments are taxed slightly differently than stocks or other marketable securities, but you are still required to report your crypto trading activity to the IRS and pay taxes on any investment gains," Anastasio notes. "If you own cryptocurrency and want to understand the implications of selling your investment, be sure to consult with a tax professional."
What does the future of crypto and blockchain look like?
While crypto and blockchain have been around for several years, experts like Osbourne see long-term potential as the industry continues to grow and evolve. Because of this, she notes that it is especially important for women to understand the space and play an active role in its future.
"Technology cannot be driven by the same egos and demographic as it has before," she says. "We can't allow fear of the unknown, or myths around tech to stop us from getting involved."
Love, too, sees plenty of opportunity in the world of crypto and blockchain and senses they will help usher in a new, more dynamic, decentralized version of the internet. Her advice? "Ask questions, play a little bit with money if you can, and don't be afraid to download a wallet and get your toes wet purchasing your first crypto," she says. "It's an exciting time for people to start getting involved now, because we're still at the beginning."