The Top 3 Cryptocurrencies Seniors Should Know About

Cryptocurrency is digital money that uses encryption techniques to control the creation of monetary units and to verify transfers of funds. As cryptocurrencies have grown in popularity in recent years, more seniors are becoming interested in learning about and potentially investing in them. Here are 3 of the top cryptocurrencies that seniors should be aware of.

1. Bitcoin (BTC)

Bitcoin is the original and most well-known cryptocurrency. It was created in 2009 by an anonymous person or group called Satoshi Nakamoto. Some key things to know about Bitcoin:

  • Bitcoin pioneered the use of blockchain technology, which is a decentralized, distributed ledger that records transactions publicly and securely.
  • There will only ever be 21 million Bitcoins in existence. New coins are “mined” by users who solve complex math problems to validate transactions on the network. This makes Bitcoin potentially more valuable over time as an investment.
  • Bitcoin can be purchased fractionally, meaning you don’t need to buy a whole coin. You can buy as little as $1 worth.

2. Ethereum (ETH)

Ethereum is the second most popular cryptocurrency after Bitcoin. Here are some key facts about Ethereum:

  • It was created in 2015 by programmer Vitalik Buterin and has many additional features compared to Bitcoin, like smart contracts which allow for more complex transactions.
  • Ethereum’s blockchain can support other cryptocurrencies, digital assets, decentralized apps and more.
  • Instead of “mining” like Bitcoin, the creation of new Ether coins relies on “staking” existing coins to validate transactions. This is more energy efficient.

Example: John invested $2,000 in Ethereum coins last month. He is now able to stake some of those coins to potentially earn more Ether as a reward for helping validate transactions.

3. Litecoin (LTC)

Litecoin is often described as “silver to Bitcoin’s gold.” Here’s what seniors should know:

  • It was created in 2011 by Charlie Lee as a faster and more lightweight alternative to Bitcoin. Transaction times are much faster.
  • Litecoin uses a different proof-of-work algorithm than Bitcoin for mining coins, called Scrypt. This levels the playing field so miners don’t need specialized equipment.
  • The maximum supply of Litecoin is 84 million compared to Bitcoin’s 21 million.

Example: Jill invested $500 in Litecoin and uses it to send payments to her grandchildren. The transactions process very quickly, usually in under 2 minutes.

Bonus: Cardano (ADA)

Cardano considers itself a “third generation” blockchain network focused on addressing issues with scalability, interoperability, and sustainability. Some facts:

  • It was founded in 2015 by Ethereum co-founder Charles Hoskinson and runs on a proof-of-stake consensus like Ethereum 2.0 plans to.
  • Cardano’s multi-layer architecture separates transaction processing from complex contract and decentralized app operation. This increases performance.
  • The ADA coin can be used to send peer-to-peer payments as well as participate in staking and network governance.

Example: Bob staked his ADA coins and earned 5% interest over the last 6 months through rewards for validating transactions on the network.

While cryptocurrencies have seen a surge in popularity and value recently, seniors should exercise extreme caution before considering investing in this highly volatile and risky asset class. Cryptocurrencies lack regulatory oversight and their prices can fluctuate wildly, leaving investors vulnerable to dramatic losses. For most seniors, crypto should be avoided in favor of more stable, tried-and-true investments.

Rather than putting money into Bitcoin, Ethereum or other cryptocurrencies, seniors should focus on maximizing contributions to retirement accounts like 401(k)s and IRAs. The potential rewards of crypto simply aren’t worth the risks for those nearing or in retirement. If you do decide to invest in crypto, never allocate more than you can afford to completely lose.

In conclusion, seniors should steer clear of the crypto craze and stick to more reliable assets for their retirement portfolios. The volatility and uncertainty of cryptocurrencies makes them unsuitable investments for most retirees. Focus instead on building a nest egg that provides guaranteed income and stability.