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Dipping My Toe Into the Crypto Market

What Is Crypto?

First a disclaimer: Nothing I am about to write and nothing in this post should be taken as an endorsement of or encouragement to invest in the crypto space or any other space. I am sharing what follows to offer some perspectives related to the crypto market based on my experiences and research.

Now that we have that taken care of, let’s dig into the topic a bit. Many, many people are super excited about “crypto” these days. I’m not excited about it, but I am definitely curious. What follows is my attempt to explain the topic a bit. I will NOT claim that everything written is technically precise when it comes to how blockchains operate, crypto is mined, and other details. What I will do, is try to expand the reader’s knowledge just a bit and provide some of my thoughts and perspective on the topic.

The “crypto” comes from “cryptography”. Think of secret codes and messages.

At a high level, “cryptocurrency” is bits and bytes. It’s essentially something you “own” and that can be “proven” to be yours.


A few things:

  • Non-physical things can and do have value.
  • We are moving more and more to a digital world.
  • We need to be able to “transact” in that digital world.
  • There are ways to “prove” something is yours digitally.


Cryptocurrency is a medium of exchange that can be used for transactions.

A little opaque, right?


What is Money?

Money is something of value that we use to facilitate commerce. It can be dollars, pounds, rupees, or anyone of many, many types. The key is that we all agree that it has value AND that it’s stable.

In the US, you often see and hear the phrase “backed by the full faith and credit of the US government”. When you have a dollar, you’re confident that it has value as a medium of exchange based on the entire US system.

Cryptocurrency is a new form of money that absolutely, positively has value. You see that by the presence of financial exchanges and the liquidity of transactions in certain cryptocurrencies.


Who “Owns” Cryptocurrencies?

The answer is nobody and everybody! A specific piece of crypto (for example, a bitcoin) is owned by an individual. But EVERYONE “owns” it in the sense that there is a distributed, fully autonomous framework that PROVES that your particular bitcoin exists.

Essentially what happens is your bitcoin is registered by putting a bit of information about it out for the public to see. There’s a well-defined cryptography framework called “the blockchain” that “proves” your bitcoin is real AND you own it by solving a mathematical problem. The ideas behind cryptocurrency are NOT new and are not cryptic. They are based on number theory that has been around for centuries.

What happened was that someone conceived of an idea where the government was NOT required to stand behind the currency; but, rather, a math equation could stand behind it.

While that sounds a bit weird, it’s actually not weird at all. When you think of it, I’m guessing you do NOT know how dollars are “created” by the Federal Reserve, but you still use them and have confidence in them.


Who “Uses” Cryptocurrencies?

That’s the key question! Initially the answer was NOBODY. Come on, let’s face it when you first heard of this you probably rolled your eyes. However, over time, people have become confident and convinced that certain cryptocurrencies have value, and they now use it.

It’s no different than using dollars. Or pounds. Or rupees. Each currency has some set of individuals who are comfortable with it as a store of value and are willing to use the currency as a form of exchange.

Newsflash. Currency values fluctuate relative to each other. They can go up. They can go down – MASSIVELY IN BOTH DIRECTIONS.

As economic systems mature, you see less and less volatility in the currency value fluctuations. The US dollar is less volatile than the Argentinian peso.

So, while people are using cryptocurrencies, it should NOT be surprising that their values are currently still highly volatile relative to well established currencies (for example, the dollar).


Why Did I Buy Cryptocurrency?

Recently I bought a bit of two crypto currencies:

  • Bitcoin which is on the Bitcoin blockchain
  • Ether which is on the Ethereum blockchain

I did so for one and only one reason:

  • Families I work with and others I interact with have purchased these two cryptocurrencies and I need to personally own them to build confidence when I speak with others related to the topic.

I am a HUGE believer that if you are discussing a topic, you need to have some firsthand experience in the topic. While I am much more well read and researched on the topic of cryptocurrency than most I interact with, I did not own any. I felt that I needed to purchase some so that I can speak from a firsthand perspective.


My opinion regarding cryptocurrency is as follows:

  • It’s not going away, and it is here to stay. HOWEVER, the SPECIFIC cryptocurrencies that will be with us tomorrow will be very, very different than they are today.
  • Bitcoin was the first. The first mover advantage is always huge. I feel confident that Bitcoin will be around in a decade.
  • Bitcoin has minimal intrinsic economic value. It doesn’t have a strong use case other than as a medium of exchange. To me, it’s more akin to a commodity.
  • Digital assets are going to expand massively over the near term. We will need a way to prove ownership of these assets (non-fungible tokens are an example of these, but that’s a topic for another day)
  • Currently the Ethereum blockchain is used to “prove” ownership of a very, very large percentage and number of digital assets. It has an economic use case. Ether, the currency related to the Ethereum blockchain, also has a first mover advantage in this space.

I am NOT expecting the dollars I put into these two cryptocurrencies to go up in value.


Some additional thoughts on the topic:

  • I don’t do math or price things in “Bitcoin” or “Ether”. I do it in dollars. Others do it in pounds. Others in rupees.
  • I see cryptocurrency as a necessary component of the digital eco-system.
  • I struggle to see a time when they will replace the dollar. Or pound. Or rupee and I can’t see governments being “happy” to have their currency replaced.


Again, I’m NOT recommending anyone to buy cryptocurrency. This post was crafted to provide some high-level information related to the topic; and, hopefully, inspire folks to investigate the topic a bit deeper.

I’m a huge proponent of education and believe this is a topic that folks should invest time in learning more about.


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Curt Stowers

Curt Stowers

Curtis Stowers helps individuals and families across the United States grow their financial assets, particularly in the Naperville, IL region. He is a Certified Financial Planner, holds a Ph.D. in Industrial Engineering from the University of Illinois, and is the founder of F5 Financial.