Here’s How to Talk Crypto With Loved Ones This Christmas

A group of friends in holiday sweaters gathered around platters of food and Champagne.

Image source: Getty Images

Our guide on handling questions from the crypto curious.


Key points

  • Be aware that not everybody is a cryptocurrency fan, and try not to oversell it.
  • Explain the risks as well as the rewards.
  • Keep it simple, and use clear examples people can relate to.

One of the less-talked-about dangers of cryptocurrency investing is that it starts to dominate your ordinary conversations. Personally, I find cryptocurrency endlessly fascinating. But that doesn’t necessarily mean my loved ones feel the same.

That said, 2021 has been an extraordinary year for cryptocurrencies, and if you’re a crypto investor, there’s a good chance you’ll find yourself questioned by crypto-curious relatives at some point over the holiday season.

Here are some tips on handling those conversations.

1. Try not to be a crypto evangelist

Blockchain technology may well transform various industries, from finance to healthcare. And cryptocurrency could change the way we use money. But it might not. And — more importantly — nobody likes being lectured. As a general rule, it is better to wait to be asked before you start talking about crypto. That way, you run much less risk of becoming a crypto bore.

Also, don’t understate the issues. It isn’t your job to convince people to buy their first cryptocurrency. Admit that crypto is not perfect, and it isn’t the solution to every problem. There’s truth in many of the common criticisms of Bitcoin (BTC) — such as its huge carbon footprint and potential for use in money laundering and funding illicit activities. Be honest about them, but also talk about the ways the industry is working to solve them.

2. Keep it simple

One of the things that puts people off cryptocurrency investing is that it seems complicated or even scary. If your loved ones ask you to explain Bitcoin, don’t tell them about its proof of work mining model or befuddle them with jargon.

Instead, use accessible language and examples they can relate to. You might tell them that the clever thing about blockchain is that it can cut the middleman out of any transaction. For example, an insurance broker might be able to automatically pay out without you even needing to make a claim.

At the same time, be prepared to venture into tricky topics like explaining how non-fungible tokens (NFTs) work and what decentralization means.

Here are some possible answers to common questions:

What’s Bitcoin?

Bitcoin is the first decentralized digital currency, which means it works without needing the backing of a bank or government. It’s a bit like digital cash — just as I can give you a physical dollar right now, I can transfer Bitcoin directly to you without involving a bank or third party.

What’s blockchain technology?

Blockchain is the technology that underpins Bitcoin and other cryptocurrencies. It’s like a huge database or spreadsheet. That’s exciting because it’s secure and can’t be tampered with, so each transaction that’s recorded on the blockchain will be there forever.

What’s an NFT?

NFTs are non-fungible tokens. They are basically a unique type of digital collectible with ownership information baked in. It’s a bit like sewing a nametag into a piece of clothing you’ve bought. You can make almost anything into an NFT, but they’ve become popular in the art and gaming world.

Why are people paying so much money for content they can get online for free?

Ownership matters to some people. In the same way that an original piece of artwork or signed print has value, so do NFTs. NFTs also offer a way to own land or items in the metaverse (but that’s another topic altogether).

3. Be honest about the risks

Cryptocurrency can be extremely volatile and risky. You don’t want your loved ones to lose money by jumping into crypto without understanding the risks and doing their own research. Some cryptocurrency investments can and have produced incredible returns. But there are also many people who’ve lost money to crypto scams, speculative investments, or hacking incidents.

Not all cryptocurrencies are going to make money. In fact, many of the coins on the market today could fail. Even with the successes of this year, many investors got burned by panic-buying at the highs for fear of missing out and then panic-selling at the lows for fear of losing more money.

4. Encourage the people you care about to invest safely

If your friends and family want to buy cryptocurrency, there are several ways you can help them minimize the risks.

  • Recommend they only invest money they can afford to lose. It’s easy to get caught up in the frenzy and forget about other financial goals, such as retirement or topping up your emergency fund.
  • Discourage going all-in on crypto. Cryptocurrency investments should only represent a small fraction of someone’s overall portfolio. This is still a relatively small and untested industry, and we don’t know what will happen in the years to come. If the crypto market fails, it won’t lead to financial ruin if crypto is only a small part of a diversified investment portfolio.
  • Remind them that long-term investing carries less risk — and less stress. The crypto market is extremely volatile, and prices can lose 20% or more in a single day. A buy-and-hold investment approach makes it much easier to weather any short-term fluctuations.
  • Suggest they use a reputable crypto platform. Reputable cryptocurrency exchanges make it easier — and safer — to deposit money and trade crypto for the first time.

If you’ve made money from crypto investing this year and are excited about the future, it’s understandable to want to share your successes with those you care most about. Just remember that giving financial advice to friends and relatives is complicated, especially with something as risky as cryptocurrency investing.

No matter how good your intentions are, if people lose money based on your advice, you could be persona non grata next holiday season. There’s nothing wrong with sharing your passion for crypto, but try to do it carefully.

Buy and sell crypto on an expert picked exchange

There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. And to find the one that’s right for you, you’ll need to decide what features that matter most to you.

To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and get started on your crypto journey, today.

https://www.fool.com/the-ascent/cryptocurrency/articles/heres-how-to-talk-crypto-with-loved-ones-this-christmas/

Jinggo B Danuarta

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