Puzzled by cryptocurrency? Here are the basics on how to use it.

A beginner's guide to cryptocurrency.

A beginner's guide to cryptocurrency.

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The Westport startup FinTron debuted its personal finance app shortly after we took a look at some of the best investment-app options on the heels of the Robinhood-GameStop market ruckus earlier this year. FinTron similarly offers the ability to buy and sell stocks, and like Betterment and others, includes savings, checking, debit cards and personal budgeting.

Ask founding CEO Wilder Rumpf whether he considered a cryptocurrency element to the app, and his response is quick — too arcane for most people, though he does not rule out FinTron adding “coin” options, in his words, as FinTron’s target audience of young adults gravitate in time toward virtual currencies as they become more common. “Our mission is to create financially astute investors, not present them with highly risky options,” Rumpf says. “Possibly down the road, depending on where the coin market goes. But it’s highly volatile — right now we are marketing to young and inexperienced investors.”

Still, amid the occasional headline of another business like PayPal, Starbucks and Home Deport accepting or offering bitcoin, the biggest player in the crypto universe, you probably have gotten to wondering whether and when to add a virtual currency to your spending options, and at what point you might consider it as an investment option no different from stocks or bonds.

Here are some of the questions on most everybody’s mind new to cybercurrencies.

How do virtual currencies enter circulation?

The cybercurrency world uses the concept of “mining” to describe how virtual currencies are created, conjuring to mind unearthing gold or diamonds. But a readier analogy might be the convenience store clerk who holds a $100 bill up to the light for telltale watermarks to ensure no counterfeit is at hand. In the case of bitcoin, miners earn newly minted currency by verifying “blocks” of transactions of existing bitcoin between buyers and sellers, with an added hurdle of solving complex problems posed by the governing software. Those audited transactions create a running “blockchain” ledger for public scrutiny — and by extension a foundation of trust for a currency system that has no central bank. In essence, it solves the problem of a bitcoin string being copied and spent over and over — no different than those counterfeit bills.

Where can I learn the basics of virtual currency?

Peter Sinkevich is one proselytizer leading an effort to spread the word in Connecticut, in the early stages of building up a state chapter of the nonprofit U.S. Blockchain & Cryptocurrency Association. In March, the group held a “cryptocurrency 101” meetup in Darien and followed it up in April with a forum focused on mining for those so disposed. In time, “how to” sessions should become more prevalent at local libraries. The best guide I have found is the free “Blockchain for Dummies” IBM offers as a free download at ibm.com/topics/what-is-blockchain (nearly 70,000 people have perused it; you have to provide your email to get it). IBM provides helpful video overviews as well; you can dredge up other good options on YouTube by searching the phrase “blockchain basics.”

What are the most common virtual “coins” today?

Bitcoin remains predominant with a market capitalization today of over $1 trillion, and anywhere from 200,000 to 400,000 transactions daily, according to a running tally maintained by Blockchain.com. After that, it’s a bit of hodgepodge with the open-source Ether cybercurrency next up after bitcoin with a market cap of about $450 billion. Others include Binance Coin, Dogecoin, Ripple and Tether, any one of which or others could overtake bitcoin which has a scheduled cap.

Where do I store my virtual currency?

In your wallet of course — the digital variety, with Coinbase one name you may be familiar with offering a digital wallet in addition to the virtual currency exchanges it maintains. Virtual currencies like Bitcoin list wallet options online, with a number of tech publications rating them for ease of use, security and other factors, including wallets from HyperPay, Ledger and Trezor.

Where do I go if I encounter a problem?

Government watchdogs are still very much on the outer periphery of the virtual currency markets. Upon becoming U.S. treasury secretary under President Biden, Janet Yellen promised vigilant scrutiny of virtual currencies, both from the perspective of criminal money laundering activity but also everyday protections for legal use. The Consumer Financial Protection Bureau is expected to work to enhance safeguards, with CFPB posting occasional tips online at consumerfinance.gov. The Connecticut Department of Banking monitors the sector under existing regulations governing money transfers.

How about virtual currency as a long-term investment?

Like any asset, “investor beware” is the operable term as virtual currencies continue to go through periodic spikes and “flash crashes” in value. You will have to get an exchange account with entities like Coinbase, TradeStation and eToro.

Buckle up, Rumpf advises. “I think what’s happening is a lot of [proponents] are enticing people into trading these highly volatile assets,” Rumpf says. “You are filling them with adrenaline and hope — and then they inevitably get destroyed by the capital markets.”

This article originally appeared in Connecticut Magazine. You can subscribe here, or find the current issue on sale here. Sign up for the newsletter to get the latest and greatest content from Connecticut Magazine delivered right to your inbox. On Facebook and Instagram @connecticutmagazine and Twitter @connecticutmag.