Financial stability is an important step at every stage in life. And as a parent, it is necessary to teach your kids about this at a young age. Many of these topics are not covered even under the modern school or college syllabus. Some parents strive from an early age to make children understand the value of money by using the official trading platform to appreciate the importance of crypto. Other than the regular pocket money, there are some extra funds paid for a job well done. Suppose, if the child misbehaves then there is a cut from the pocket money. While these may seem mundane, it helps to teach children some important life skills.
Cryptocurrency and children
The topic of crypto investment is common in every household. The young generation is a party to these conversations as well. Additionally, they are learning about this investment through various online tools also. Hence, you need to have a conversation with our kids about crypto. The benefits, threats, and uses of this investment.
Understanding cryptocurrency and its working model
Cryptocurrency uses a decentralized finance model to undertake transactions. This is a global currency and is not pegged down to any particular currency. The currency runs on the blockchain platform. This means every transaction breaks itself down into single chains of transactions. These chains are then stored in the public ledger. The transactions are undertaken through peer-to-peer transfer. As of today, there are more than 4000+ cryptos. The total market volume of crypto has increased to more than $2 trillion globally.
Five important features of cryptocurrency
Listed below are a few important features that your child needs to understand on crypto.
Popularity continues to grow
Since the launch of Bitcoin in 2009, the popularity of crypto continues. Cryptocurrency takes digital form. It allows users to buy and sell goods and services. It takes a similar role as that of fiat currency. Retailers like Starbucks, Burger King, and Yum brand today accept crypto payments. While there is no physical shape to this currency, the value is inevitable.
Setting up a crypto account
To buy crypto, an investor needs to set up an account with an exchange. Every country has its unique crypto exchange law. It is important to understand the law and choose the wise exchange. Choose an exchange that has the most crypto listed. The exchange needs to also have dual payment options, debit, and credit banking.
Cryptocurrencies work on decentralized finance. This investment model does not tie down to any currency or country. Cryptos are accessible from anywhere across the world. You can use this currency to buy goods and services with the available balance.
Security in transaction
Cryptos are completely secure and are not prone to any outside threats. Every transaction undergoes a complex validation process known as data mining. Also, the transactions break down into single units. These units are then stored in the blockchain network. To date, there have been nil reports of hacking reported on cryptocurrencies.
Prone to market fluctuations
Unlike other investments, cryptos are prone to huge market fluctuations. Price volatility is an attached feature of crypto. A simple tweet can increase or decrease the price of cryptos. The market is never stable and price changes happen in a fraction of seconds.
Understanding blockchain network
Blockchain is nothing but a distributed ledger stored in a network. Blockchain stores all information in electronic format. There is the security of transactions and user credentials. Every user transaction breaks down to many layers within the network chain. Another interesting factor is that none of these transactions can be overwritten. All new information gets added to newly created blocks within the network space. Every block is also given an exact time stamp and name. But the name here is different from its users. Hence, there is no way to track any user transactions.
In the current scenario, the crypto investment model is here to stay. While price volatility is a huge risk, the lucrative returns attract huge investments. The market will continue to grow. Many countries are also working to develop policies and governance frameworks. This will allow for better management of this investment module. Helping your kid learn this investment from a young age is beneficial.