Cryptocurrency is a digital currency which is often written about in the news landscape and social media – whether you’re a parent, carer, or educator, you can find out the basics of cryptocurrency here in case your child or pupil approaches you about the subject.
Why learn about cryptocurrency?
If you are a parent or carer with a teenager, they may have come across conversations about cryptocurrency and NFTs at school or online.
If your child is interested in the subject, it could be useful for you to know the fundamentals of cryptocurrency and NFTs.
It could also be useful for you to able know about and be able to identify ‘crypto scams’ and, if necessary, advise your child about these.
If you are a professional in a school, it may be useful for you to know the age restrictions and risks associated with cryptocurrency, should you be asked about it by a pupil.
What is cryptocurrency?
Cryptocurrency is a digital type of currency which people can use to make transactions – similarly to physical currency like pounds and euros.
Cryptocurrency is decentralised, meaning that it isn’t monitored or issued by a central authority, such as the government or a bank. Instead, most transactions are publicly recorded on a digital ‘blockchain’, meaning anyone can see it.
Seeing as the blockchain is made up of real-time transactions, it helps to increase their speed and security, reducing fraud.
The dangers of crypto lie instead with its volatile value; scammers preying on new customers; and the inability to take back transactions once they’ve been made.
What is an NFT?
An ‘NFT’, or ‘non-fungible’ token, is similar to cryptocurrency in that its transactions are made on a blockchain.
However, NFTs are completely unique in comparison to physical money and cryptocurrency: in that an NFT cannot be traded with another NFT.
NFTs represent rights to own something, and most commonly represent works of art and music, but pretty much any digital asset can be sold as an NFT, including:
- An in-app item
- A tweet
- A ticket to an event
- A video, such as a sports highlight
Perhaps one of the most famous NFT sales was Twitter CEO Jack Dorsey selling his first tweet, worth $2.9m.
The reason why they cannot be exchanged for one another is because they do not have a value until somebody pays for one.
However, even setting up an account for buying NFTs requires you to be over the age of 18. If your child talks to you about NFTs, remind them about this age restriction.
Is cryptocurrency legal?
As it’s not stated otherwise, it is 100% legal to buy and sell Bitcoin and other cryptocurrencies. However:
- To buy and sell bitcoin online, you need proof of ID
- Whilst technically you can ‘mine’ for cryptocurrency at any age, the most popular and safe sites to buy and sell bitcoin (like Coinbase or PayPal) have an age restriction of 18+
‘Mining’ for cryptocurrency means using your computer to solve complex problems in crypto blockchains – however, you need an extremely advanced computer and mathematical brain to do this.
Also, as more people mine for cryptocurrency, less coins and tokens are being given as a result, so this way of ‘earning’ cryptocurrency is becoming obsolete.
Notably, bitcoin is starting to be accepted as form of mainstream payment for some major companies such as Microsoft and Expedia. You can also buy bitcoin using PayPal.
How likely is it to be scammed?
There are risks with using cryptocurrency, just like there are risks with all currencies.
Perhaps the most common risk of cryptocurrency compared to other currencies is its volatile nature and the potential for its value to crash.
A bigger risk to young people is the potential to be scammed. They may come across influencers on popular social media apps advertising the opportunity of a brand new cryptocurrency, with the potential to make big money. These ‘phishers’ have also been known to impersonate celebrities. Read more about phishing and scams here.
Due to the unregulated nature of cryptocurrency, victims of these scams can do little to get their money back.
Whilst the government have no official legislation on cryptocurrency as of yet, it announced in January 2022 that it plans to protect consumers from harmful crypto advertising that lead to fraud or scams.
It said: “The government plans to legislate to address misleading cryptoasset promotions” and that “adverts will be brought into line with other financial advertising, ensuring they are fair and clear.”
What if my child is interested in cryptocurrency?
With what you know about cryptocurrency, make sure your child is completely aware of the fundamental risks and age restrictions, and try to find out about where they heard it from.
If they heard about an amazing deal on social media, it might be worthwhile discussing trusted sources, misinformation and scams. You can read more about reliability online here.
Point your child to trusted resources and websites – there is plenty of information out there for them to learn about cryptocurrency in a safe and secure way.
Whilst they might have heard about a success story of a child becoming a millionaire by mining cryptocurrency, there are just as many – if not more – stories about people getting scammed.
