Throughout the history, the stock market has been a main source of wealth for the majority of investors.
Stocks give a return of 7% a year on average, including dividend reinvestment, and taking into account adjustments made by inflation. This number means doubling in value every 10 years, which had been always considered a good way of investment. However, after cryptocurrencies became a new trend, traditional sources of wealth creation look somewhat outdated. In 2017, the overall value of cryptocurrencies exceeded $17 billion. Earlier this year, the combined market cap of thousands of cryptocurrencies used by investors was almost $840 billion. This means an increase of 4,500% — a shocking number for everyone who had been used to trade on the stock market.
Even though cryptocurrencies have already changed the world of trading, there are many people who still don’t understand how they work. The problem is that cryptocurrencies are based on the complicated technology called blockchain. On one hand, one should be familiar with the basics of programming to understand this technology. On the other hand, there is always a simple way to explain even the most difficult theories.
Why Do We Need to Understand Blockchain?
The boom of cryptocurrencies caused a wave of hype and rush, so the blockchain technology now attracts more attention than ever. Perhaps, you’ve googled blockchain looking for an understandable explanation, but cryptocurrency experts keep using difficult terms and provide more details than most people can understand.
Simply put, blockchain is a decentralized accounting book that consists of blocks — multiple units of information. It is the information about transactions, and each transaction is possible due to smart contracts that use a technology of digital verification. These two things are a basis for the transparent transferring of data, which is more secure and much faster than any traditional solution.
Invented for cryptocurrencies, blockchain itself has quickly gained popularity because experts from various sectors realized the widest variety of its possible applications. This technology can be used in any sphere where we need to protect data. Such companies as Walmart and IBM are adopting blockchain to modernize and improve their supply management. Wall Street titans like American Express and JP Morgan are investing in blockchain to make transfers faster and safer. Even though blockchain is unlikely to find its applications in our everyday lives in the nearest future, it will be here sooner than you may expect. That’s why we need to know and understand how this system works. Thus, we decided to provide you with a few tips on how to acquaint yourself or even your children with this technology.
How to Help Yourself and Your Kids Understand Blockchain
1. Get a wallet
Given that blockchain is mostly used in financial industry, we suggest starting from getting a cryptocurrency wallet. If you wanted to teach your kids to trade stocks, you would start by buying a small portfolio of stocks. Similarly, a wallet of coins or tokens will teach both you and your kids how blockchain works. Any wallet allows you to interact with blockchain networks, receiving and sending digital assets.
Having a cryptocurrency wallet, you can access numerous crypto markets, being able to familiarise yourself with altcoins. In addition, it’s quite cheap. Using the wallet, you will understand what smart contracts are, and how decentralized ledgers work. Unlike traditional methods, digital transactions don’t require a third-party provider to be processed and recorded. Instead of being owned by an organization or a person, these records are encrypted and stored on thousands of different computers. At the same time, no one has control over these records, as their computers serve only as a means of verification, and a transaction is verified only if all the copies of information perfectly match.
2. Learn basics of programming
There are countless online sources where you can get the basic knowledge of programming and even learn to make your own blockchain network. All you need to know is Python. Amateurs who know essentials of Python successfully build their own contract systems and ledgers, being able to store the necessary information using blockchain.
If you familiarize yourself with coding, you’ll be able to better understand the nature of this technology. Those who have a certain experience in computer science can benefit from this knowledge even more, since blockchain engineers are in a great demand.
3. Learn intelligent investing
Now that the blockchain technology is evolving, various startups develop new technical solutions, providing new opportunities for investment. Most of these startups have their own tokens and build their fundraising strategies on ICO (Initial Coin Offering). This allows investors to get a portfolio of coins associated with the company they believe in.
Intelligent investments allow enthusiasts to explore new and already existing applications of the blockchain technology. If you’re focused on a business side of the subject, blockchain startups can provide you with the necessary methods so that you can familiarize yourself with this growing industry.
Young enthusiasts can get a great experience working with blockchain by starting an internship in a startup company. Almost all new blockchain companies are looking for prospective employees. Moreover, they need help with quite different tasks, from programming to management to content creation, so everyone is able to find some work related to the blockchain industry.
5. Attend conferences
There are many conferences, such as Block2TheFuture, that allow everyone to learn more about blockchain. Both adults and kids who want to gain an in-depth understanding of blockchain will benefit from attending such events where they can see speakers from all sectors of the industry, learning about investment analysis, ICO, smart contracts, tokenization, enterprise blockchain, and atomic-swaps. Block2TheFuture also has special programs for kids, where they get basic the knowledge of wallets, Bitcoin, and programming.
Designed for cryptocurrencies, blockchain is now used in many spheres that have nothing to do with finance. For example, MiVote.org.au is an online voting platform that uses blockchain. The complicated validation system that involves thousands of computers ensures that all votes are real and not duplicated. Results of such voting will never change depending on the human factor or methods of counting.
Such companies as VOICE and Ujo Music are going to change the music industry, developing technologies that will allow users to pay for music from their wallets directly to the wallet of their favorite artist. Blockchain also offers countless opportunities for the effective storing of data, taking cloud storages to a next level where nobody but a user controls his or her information.
Even though most blockchain projects are just announced but not yet released, you need to learn this technology now. Today blockchain is where the internet had been 20 years ago. Maybe you won’t need to know everything about how blockchain works, but the understanding of this technology will help you see how the classic centralized business model is going to change in the future. Even if this technology seems too sophisticated at first, all you need to do is just get your first cryptocurrency wallet and start learning.