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Cryptocurrency 101 with Sean O’Connor

Sean O’Connor from Blocknative Corporation talks about the basics of Cryptocurrency in this episode of Explain it Like I’m 5.

Sean O’Connor

onomy.co x Sean O’Connor

Sean O’Connor is currently Chief of Staff at Blocknative Corporation, with past experience as a cross functional product marketing leader and a track record of helping businesses develop new products and launch them into the market successfully.

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What is crypto?


Onomy:
Welcome, Sean! Can you just start by telling us what crypto is?


Sean:
Cryptocurrency is a new form of digital money. I mean digital money, super old concept. If you’ve ever read cryptonomican, it’s something sci-fi has talked about for many, many years. Most people think about crypto as Bitcoin. But specifically they think about Bitcoin, the cryptocurrency. And it’s important to note that like Bitcoin, the cryptocurrency runs on Bitcoin the blockchain, and you can do a lot of things with blockchains aside from just cryptocurrencies and buying and selling tokens. So cryptocurrency just really plain and simple is just digital tokens that are probably unique and scarce.

What’s the difference between blockchain and crypto?


Onomy:
What is the difference between blockchain and crypto?

Sean: So think of the blockchain as like the underlying technology or the network and you can run tokens on top of the network. Ethereum is the most popular smart contracting and blockchain language out there. And Ethereum the cryptocurrency runs on Ethereum the blockchain, but you can do other stuff on Ethereum the blockchain, like buy crypto kits, which are non-fungible, digital art tokens, or you could do things like participating in defi, stable coins representing $1 US run on Ethereum, the blockchain and the most popular ones are DYI, which is run by the Maker Foundation and USDC, which is actually by Goldman Sachs and Coinbase.

So think about it like blockchains are almost to the internet as the internet as a whole and cryptocurrencies are applications on top of the blockchain. So think about it sort of what Google is to the internet, cryptocurrencies are to the blockchain.

Onomy: You mentioned Ethereum in there, we’ve talked about Bitcoin. Dogecoin, I think, is everyone’s favorite pet cryptocurrency. What’s there for us to make of these different currencies that are out there, the different coins? How should we interpret those and what are the differences?

 

What’s the difference between Ethereum and other cryptocurrencies?

Sean: The differences are pretty vast, but in general you could think of most cryptocurrency coins that are out there tend to either be a derivative of Ethereum or a derivative of Bitcoin. And dogecoin back in the day, I think it was in 2016, a developer who didn’t quite get Bitcoin forked it and created a derivative of Bitcoin, but put a funny dog on the top of it and eventually went on to sponsor a NASCAR, et cetera. So the underlying technology is similar to Bitcoin, but it’s not Bitcoin, it’s a fork of Bitcoin that they put a fun meme on top of.

Onomy: How does one trade in cryptocurrency? It kind of moves similarly to the stock market, but at the same time, not. So can you explain some of the key factors that impact crypto prices?

Sean: Crypto tends to be more correlated to the stock market than not. And as friends are getting into the space, I like to tell them don’t put anything in the space you’re not willing to lose because it’s super volatile. As we saw last week, prices collapsed 50% in a day, which doesn’t really happen in the stock market all too often, but has happened before. And there’s been a lot of research fidelity, which is one of the largest asset managers in the world, published a report last year, looking at what a portfolio with 1% exposure to Bitcoin would do and it outperformed the market.

So if you think about cryptocurrencies as you’re thinking about your overall stock portfolio, it makes sense to have some exposure, but you have to figure out what your risk appetite is. At the end of the day, if they all blow up and the market regulates cryptocurrencies pretty heavily, you want to make sure you’re in a good position. I am not an investment advisor and I do not play one on the internet. So do your own research. And if you can’t explain a cryptocurrency or a token to someone who’s say five years old, you probably shouldn’t be buying it.

Onomy: Ethereum versus Bitcoin, which has wider applications?

Sean: Different applications. Bitcoin, think of it more like digital gold, digital money. People who have Bitcoin don’t really spend their Bitcoin. Ethereum is the major smart contracting language today, which has broader applications and is more like the meme of the world computer.

That being said, there are projects like block stacks, which is working on bringing smart contracting to Bitcoin, when they actually are in the process of launching the first NFT from Dead Mouse, which will be launched on the Bitcoin platform peg to the Bitcoin blockchain. Remember when I said earlier, Bitcoin, the cryptocurrency is different from Bitcoin, the blockchain, and you can do stuff with blockchains that you can’t do with crypto.

Onomy: If you enjoyed hearing from Sean, don’t forget to subscribe to our newsletter for more quick tips on making adult life easier! 

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