Cryptocurrency is one of the topics Marketplace is asked about the most. Even after the tech hype cycle moved on to artificial intelligence, people still want to know about crypto.
We had some fun on “Million Bazillion” teasing the type of “dudebro” who gets too deep into crypto. But in the year and a half since that episode came out, bitcoin nearly tripled in value. In that same time, investors poured billions into newly approved bitcoin funds, and one of the biggest cryptocurrency exchanges in the world collapsed after stealing billions from its users.
People are making and losing a lot of money in crypto, but it’s still very much the Wild West out there. Let’s get into it!
In this week’s lesson, we’ll explore:
- How crypto works
- How it’s different from other currency
- The risks involved in investing in cryptocurrency
Your kids will:
- Learn more about other goofy cryptocurrencies like dogecoin
- Analyze ads using a worksheet
- Check out more stories about crypto from the Marketplace archive
Listen to this!
The kids want to know!
Bitcoin is the most popular, most valuable and oldest surviving cryptocurrency, but it’s not the only game in town. Barbara, age 8, from Knoxville, Tennessee, wants to know, “What is dogecoin?”
Great question, Barbara! Before we can tell you about dogecoin, though, we have to tell you about an internet meme from before you were born. “Doge” started as a goofy way to refer to dogs, but around 2013 it came to mean one specific shiba inu pooch who was always saying “wow.” The memes are still used to this day, and they’re still pretty funny.
Dogecoin was launched in December 2013 to make fun of cryptocurrency hype at that time. But dogecoin, like its mascot, had remarkable staying power. By its peak in 2021, dogecoin’s value had surged 12,000% in just a few months. Other goofy “meme coins” have popped up, but dogecoin is still the most popular.
As with all cryptocurrencies, the value of dogecoin is extremely volatile, meaning it can jump all over the place. Even with the huge swings over the years, dogecoin’s value has never hit $1. That 2021 peak we mentioned coincided with an episode of “Saturday Night Live” guest hosted by Tesla and SpaceX CEO Elon Musk.
Musk had posted a lot about dogecoin leading up to his SNL appearance, driving up the enthusiasm of the bidders and, in turn, the value of the currency. “If the richest man in the world is putting his money in dogecoin, it must be a great investment,” his fans thought.
But when Musk and the SNL comics made a joke about dogecoin being “a hustle” on live TV, the cryptocurrency tanked 40% overnight.
That’s the big takeaway: Cryptocurrencies only have the value people think they do. If that belief wavers, people can lose a lot of money.
Let’s watch some commercials!
We’ve talked a lot about how important “true believers” are to cryptocurrencies’ value. Just like toy companies, soda brands and Hollywood movies, crypto companies have used advertising to try to get us to buy in.
Ads try to get your attention in all kinds of ways: celebrity endorsements, goofy mascots, interesting stories. Often, ads will try to make you feel like you’re missing out if you don’t buy something, in this case cryptocurrencies.
In the past few years, cryptocurrency companies spent big on flashy ads. Watch a few with your kid and see if they can spot those tricks. Talk about why an ad for cryptocurrency in particular might use these strategies, and the risks the ads leave out.
We made a worksheet to help guide your child’s thinking. Any ad will do, but here are a few crypto ads from yesteryear to get you thinking:
- “Don’t miss out” for FTX
- “Break the cycle” for Coinbase
- “Make History” for Crypto.com
- “Crypto for Olliv us” for Olliv
Extra credit!
This week was pretty heady, but if your kid still wants to know more about crypto, here’s a few of our best stories and interviews to check out.
- We’ve referenced it a few times, but if you or your kid want to learn more about the fraud scandal that brought down FTX, here’s an interview about why it’s a cautionary tale for investors.
- Crypto miners make a quick cameo in the episode. If your kid wants to know more about how cryptocurrency is made, we took a shot at explaining it as simply as possible.
- Finally, crypto is popping up in high school personal finance courses, but teachers often lack the tools to teach about the technology effectively.
Next week: The stock market!
We do the numbers every week on “Marketplace,” but what do they really mean? Next week we’ll get into it! See you then.