Cryptocurrency is So Damn Confusing
One of the hardest aspects of visiting a new country — outside of the language barrier — is understanding the value of that country’s currency.
I remember my first trip outside of the United States — I was young, and my family and I visited Costa Rica. When we arrived, my dad handed me 5,000 colóns (their local currency) to use as pocket money. I thought I was rich! I found myself dreaming of buying an entire toy store.
I remember thinking that we’d unlocked the key to wealth: just convert all your money into colóns!
Of course, we all know that’s not how it works.
But it’s a strange feeling, isn’t it? Once you have this new currency, you get this disorienting feeling of not quite understanding the value of, well, everything. The steak at the restaurant is 10,000 colóns. Is that a good deal, or are you being ripped off?
Traveling makes you realize just how bizarre our relationship with money is. You realize that a currency’s “numerical value” is just an arbitrary number — like 1 USD, or it’s equivalent 537 colóns — and that we truly establish our relationship to money’s value by tying it to tangible items that we use every day.
You know how “rich” you are in your local currency because you know what your money will buy you. If you’re Zooko over at Zcash, you know that a week’s worth of groceries resembles, roughly, $100 (Zooko, if you’re reading this please help me bring down my grocery bill). If you live in a large city like Los Angeles, you know that having roughly $5,000-$7,000 to spend per month on rent, your lifestyle, and everything in between, means you’re doing pretty well.
Once you’re in another country, you can no longer track this as easily. You have to do mental arithmetic, taking the quoted price of a good and converting it into USD. It’s convoluted, it’s a headache, and it gets harder the more volatile the value of the currency you’re dealing in becomes.
It’s why people have a hard time wrapping their head around cryptocurrency. It’s as if they stepped into a new country, one made of 1’s and 0’s, and now have to do mental arithmetic to properly value the price of bitcoin. On top of that, there are not many practical things that you can buy with bitcoin.
Most people aren’t denominating their rent and groceries in terms of bitcoin. This makes it even harder for “nocoiners” to understand bitcoin’s value. “What do you mean it’s worth $7,000? Who determines that? What can I buy with it?”
While you typically associate the value of your local currency by relating it to the goods you buy on a daily basis, with bitcoin this step becomes removed. You have to associate bitcoin to your local currency and then associate that to the goods you buy.
With altcoins, the equation gets even more difficult. Now, you must associate that altcoin’s value to bitcoin (or ETH), which you then must associate with your local currency and THEN the things you buy daily.
It’d be like going to Costa Rica, buying colóns, and then converting those colóns to Chinese Yuan and trying to make conscious purchasing decisions.
It’s cryptocurrency’s hardest pitch to an average consumer. Add to it the cultural stigmas surrounding money, the behavioral changes money causes in us, and the ideologies money creates, and you’ve created an environment that is extremely difficult for the average individual to comfortably step into.
So how can someone become more familiar with cryptocurrencies? I think the best way is to just jump right in and buy some.
It reduces the mystery and allows you to lift the veil on some of the odd idiosyncrasies in the space. The longer you stick around, the more comfortable you’ll get. Eventually cryptocurrencies won’t feel confusing, they’ll feel liberating.