Cryptocurrencies are like money tokens in Monopoly, but the difference is that they are digital. In addition, they do not have a “fixed value” established by law. Unlike traditional finance, the cryptocurrency sector is largely unregulated and the value of each cryptocurrency is derived from people's continued willingness to buy and use them. It's worth explaining that they don't have a “fixed value” established by law and that it can be difficult to exchange virtual currencies for real money.
You can help your child research the topic by consulting reputable sources, such as Investopedia, which explains in clear terms what cryptocurrencies are and the possible risks and benefits. We all know that, for 11 years, bitcoin has shown the world how cryptocurrencies are changing the global financial landscape. When you use a cryptocurrency, it's like paying cash for something directly to the seller for something: once it leaves your digital wallet and is deposited in the other person's, it disappears. Your child may have heard the terms cryptocurrency or Bitcoin, watched the flashy cryptocurrency videos on TikTok, or discussed the topic with friends, but still doesn't fully understand their meaning.
Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, in maintaining a secure and decentralized record of transactions. Now, the use of cryptography and blockchain technology ensures that cryptocurrencies are almost impossible to counterfeit or spend twice, despite being digital. No central authority issues cryptocurrencies, making them theoretically immune to government interference or manipulation. Cryptocurrencies are a complex topic, so start the conversation by talking about digital or virtual currencies that they may be familiar with in the games they play online, such as Fortnite, Roblox or Minecraft.
Cryptocurrencies are a relatively new invention, and many of us would be perplexed if children or teenagers asked us about them. Alternatively, you can tell your children or grandmothers that cryptocurrencies allow you to send money to your parents who are currently retired in South Africa (assuming you live somewhere else). To do this, they ask young people to move or accept money from cryptocurrency exchanges with the promise of paying in cryptocurrency. In different corners of the world, bitcoin is increasingly accepted in stores and restaurants every day, and the growing number of bitcoin ATMs around the world is another encouraging sign that cryptocurrencies are revolutionizing major currencies.
It requires coding, something for when they are a little older, but for now you can talk about what their own cryptocurrency currency would look like and what its value could be. In addition to helping your children find reliable information, it's important to talk to them candidly about the risky nature of investing in cryptocurrency.
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