Crypto Dinner with Mom — Part 1
“What‘s that on your screen?” The curious voice of your mom cuts through your thoughts. Flashback — your teenage years, unlocked doors and embarrassing moments.
But then you realize: It’s the holidays, uncle Bob‘s 70th birthday party or some other mundane family gathering. You don’t even live at home anymore. Someone will have already asked inappropriate questions like „How have you been?“, or „When are you finally settling down?“, or „Where is [ex-girlfriend’s name], I liked her so much…“
After fighting off more than one advance of a probing aunt or uncle and finally settling in on your phone, checking how your crypto portfolio is doing (shameless plug for Accointing), you find your mom looking over your shoulder and glancing at the graphs and numbers.
And with a bored expression on her face (she doesn’t like this gathering any more than you do), she asks: “What’s that on your screen?”
This article is for you, if…
- … you’ve ever been in a situation similar to the one described above
- … you are looking for a simple way to explain the Crypto world to the people around you
What’s That on Your Screen?
“On my screen? I am just checking my crypto portfolio.” — Wouldn’t it be great if this was the end of the conversation? If what followed was just an “Ah, gotcha…”?
But that’s not how stuff like this usually turns out. But since you don’t have anything better to do anyway, you settle in your comfy chair and start taking questions.
What’s a Crypto Portfolio?
A crypto portfolio is just the collection of all the different crypto assets that I own. Just like a bag that I’ve put all of the stuff in that I bought in a store. I can look at the bag in total (portfolio), see what I paid for it and how much it weighs, but I can also look at the individual items in the bag (crypto assets).
What are Crypto Assets?
In simple terms, they work in a similar way that stocks do. You can buy and sell them at different prices on an exchange. The big difference is that this one is open 24/7 and not really located in New York or London or Frankfurt, but can be accessed from anywhere. There are many different crypto exchanges all over the world.
What do the Graphs do?
The graphs show the historical prices for the individual crypto assets over time. This means that you can look at this graph and see the price at which people bought and sold each asset at any time in the past. It therefore also shows the value of each asset that I own. It goes up and down because people are willing to pay more or less for an asset — just like in the real world.
So … is it Something like Bitcoin?
Yes and no. Bitcoin is one cryptocurrency that I own a little bit of. It is definitely the most well-known cryptocurrency out there and as far as I know, it’s also the first. But there are many other assets out there.
Now that I think about it… What is Bitcoin?
While you’ve most likely read about Bitcoin and the value it does or doesn’t have, you might have paid little attention to what Bitcoin actually set out to do.
People have envisioned Bitcoin to be a digital currency that allows people to trade with each other with digital money that is independent of any form of bank.
This means that I could for example order some special product from Thailand and instead of making a bank transfer or going through PayPal or Western Union, I could just send this person some of my digital currency.
Just as you most likely have no idea exactly why or how your credit card works, or even how your car works, most people don’t really need to know the specifics of the underlying technology of Bitcoin. The important part is this: It works…
In Part 2 (maybe after Uncle Bob has said a few words), we are going to look further into my crypto portfolio. I am going to explain the difference between Currencies, Utility Tokens, and Security Tokens and give an overview of what the future might hold for us in terms of real-world application.
Disclaimer: This article about taxation of cryptocurrencies contains an opinion on generally worded taxation principles. They are explicitly not tax advice. As of yet, the taxation regulation is not completely unambiguous for crypto taxation. This article is not made to answer questions geared towards taxation and cannot replace an individual consultation with an accountant, attorney or bookkeeper.
Please ask your accountant before declaring your taxes.
Disclaimer II: I am affiliated with Accointing and am involved in creating marketing materials (such as this article) for the crypto portfolio and tax platform.
Website: https://www.accointing.com
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