Crypto Literacy 101
Crypto literacy is financial literacy. This is because cryptocurrency is also money. It’s important to know a thing or two about how money works so you can properly work the system, and generate wealth for yourself. Using just a couple of simple financially literacy concepts, you can really level up your money skills. In episode 7 of the Go Full Crypto Podcast, we start by discussing the value of a dollar, and what it means to earn one, and spend one. This is a really useful thought exercise when conceptualizing money because it allows you to understand the relationship between your work, and the reward you get for it. Mrugakshee leads the discussion by prompting us to tell stories from our past about how we learned about money.
The Value of a Dollar
When I (Keegan) was young, my grandfather taught me the value of a dollar. This lesson turned out to be extremely useful later in life. The essence of this lesson is understanding the relationship between an amount of work put into a task, the amount of reward you get out of it, and the amount of goods or services you can purchase with your reward. After understanding how these three things interact, you start to gain a picture of your skills, how people value them, and how quickly you may increase your wealth.
I put myself through university, and in order to do so, I worked throughout highschool in order to have enough money. What I chose to do with my money, is invest in myself. Education is fundamentally, an investment in oneself. There are few investments that are better than and investment in your own skillset, and your ability to be valuable to others.
Financial Literacy Starter Tips
With just a couple of tips, you can really level up your financial literacy, and thus, your crypto literacy. Financially literacy is simply the ability to understand financial concepts as they pertain to how you manage your money. We’ve already covered some financial/crypto literacy topics, such as bitcoin mining. This is an important lesson because it directly contrasts the way that governments manage their money supply. This concept will come in handy when we take a look into why cash is the worst investment. These next two tips are the starting point for anyone seeking financial freedom, in or outside of the world of cryptocurrency.
Pay Yourself First
The first thing you need to learn to do, is pay yourself first. It doesn’t really matter if it is $1 a week, or $100 a month, the point is to put away some amount of money into a safe, and secure place. As soon as you start doing this, you suddenly have options available to you to grow that money. Some people call it a rainy day fund, others call it their retirement savings plan, for me, it’s common sense. You should be able to reap the rewards of your labour, in both the present and the future. By paying yourself, you’re actually giving a future version of yourself money. This idea helps people conceptualize the utility of putting away money now, for the promise of a better tomorrow. When you decide to pay yourself first, then next question you need to answer is how to pay yourself.
Invest in Assets
I choose to pay myself with bitcoin. I use bitcoin as my long term savings plan because cash is the worst investment. This is because cash only depreciates in value over time. Assets on the other hand, are not guaranteed to go up, but they are also not guaranteed to go down. The financial literacy conversation tends to get a bit complicated when talking about assets, because there are so many types of different assets out there. There are stocks, real-estate, cryptocurrencies, and much more. How does someone with no investment experience know what assets to invest in? This is the exact question I asked myself in 2015, when I started to have some income that I was able to invest.
What I decided to do, was invest in one asset that I totally believed in. I was able to justify my belief that this asset had long term value based on what I knew to be true about it. This is the strategy that I would recommend to others as well. Start small, and start simple. There is no need to complicate your life by investing in the top 10 stocks you think look good on the day you decide to invest. For me, investing in bitcoin was the right decision for the following reasons.
I could do it myself. I didn’t need the help of a financial advisor.
It is not centrally controlled. There was no way anyone could take away, or periodically charge me fees.
Cryptocurrency (Bitcoin) is the future of money.
My third reason is a personal belief of mine that compels me to keep my retirement plans within cryptocurrency. With most assets, the value of them go up in the long term. Although assets may be subject to market forces which reduces their value in the short term, on a long enough timeline, they are a much better investment than just holding cash.
Crypto Literacy is Financial Literacy
Understanding cryptocurrency is not so hard once you understand the fundamentals of money. This is because cryptocurrency is money. Therefore, financial literacy is crypto literacy. By stepping up your game and educating yourself on the ins and outs of cryptocurrency, you are simultaneously becoming your own financial guru. Go Full Crypto is inviting you to join us on our journey as we explore the world of cryptocurrency in pursuit of a better financial future.