If the terms “crypto” or “blockchain” make your eyes cross with confusion, you’re certainly not alone. One of the buzziest terms in contemporary finance, cryptocurrency can feel incredibly difficult to understand. Is it a digital currency? A stock? And why have so many people made memes about it?
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Some of these questions are easier to answer than others, especially when using an asset like ChatGPT, which is adept at synthesizing complex information into easy-to-understand bits. Which, for many laypeople, is exactly what they need to get a handle on the crypto market.
I’m one of those laypeople, so I decided to ask ChatGPT to explain crypto to me like I was 12 years old. Here’s how it broke down.
I started off with a very simple prompt: “Can you please explain crypto to me like I’m 12 years old?” And my pal ChatGPT came in the clutch, saying that it would explain it to me like we were friends at lunch.
“Crypto (short for cryptocurrency) is like money on the internet, but it’s not printed like dollars or coins. It’s completely digital. You can’t hold it in your hand, but you can use it to buy stuff, save it, or send it to someone — just like money.”
Hey, that makes sense! It even explained where the word “crypto” came from:
“‘Crypto’ comes from cryptography, which is a fancy word for super-secret codes. Cryptocurrencies use these codes to: keep your money safe, make sure no one can cheat or copy it, and let people trust it without needing a bank.”
Thanks, ChatGPT!
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OK, so money stays in your bank or financial institution of choice. Stocks live in your brokerage account. But where does crypto reside?
My buddy ChatGPT tells me that crypto lives on the blockchain, which is basically “…like a huge public notebook that everyone can see, but nobody can erase or cheat.” The blockchain keeps track of every transaction (as in who sent what to whom). And when you buy crypto, the virtual currency is also stored in your digital wallet.
“Every time someone sends crypto, it gets added as a new line in the notebook, and everyone agrees it’s real,” said ChatGPT. “Crypto is decentralized, which means there’s no boss, bank or government in charge. It runs on thousands of computers all over the world.”
That makes a lot of sense. I’m starting to get it now. But what can I even get with it? Turns out, a lot. I can buy stuff online, send money to a friend instantly (even if they’re in another country), or hoard it like a dragon with their digital gold. You can even use it in online games or to buy digital art, like NFTs.
