What are Smart Contracts?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, we talk about Smart Contracts: What they are and how they work.

Remember that blockchains like Ethereum are “programmable money”. They allow makers to create their own financial instruments, for example crypto currencies.

Smart contracts are the blockchain equivalent to real world laws, but they are impossible to violate.

In order to achieve that, these blockchains define what the functional building blocks are, so that the computers executing them are all talking the same language. Think of it like Lego: You can build anything with it, but the Lego company provides you with a bunch of literal blocks that you can put together any way you want.

A smart contract takes these building blocks and builds with them whatever the developers want to achieve. That could be simply moving money around between wallets, or also creating new money, or destroying some. A smart contract defines exactly how a crypto currency or any other financial instrument work.

And because the smart contract is executed on the blockchain, all instructions it carries are public and readable by anyone. They are also set in stone by design, meaning that everyone executing a transaction on a specific smart contract can expect the correct outcome.

So, that’s what a smart contract does. And next time we’ll debunk the myth that crypto is great for criminals, and you might be surprised to hear why.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What are gas fees and why are they sometimes so high?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

If you’ve followed this podcast, you’ll know by now that crypto has the potential to improve the efficiency of our financial system by a lot – so why are there transaction fees, and why are they so high for some blockchains, like Ethereum?

First, let’s revisit why we will always need transaction fees, regardless of how advanced blockchain technology becomes. We need independent participants to verify transactions to ensure that none can be faked. Those people operate computers, and those computers cost money and eat energy.

Many networks pay for those validation costs with so-called “gas fees”, which is crypto talk for an extra fee on top of every transaction that those operators earn.

Ok, you say. So far, so good – pay a little money for a few seconds of some computer operating somewhere. But why does it cost over $200 sometimes to do just about anything on Ethereum for example?

There are two reasons: Blockchains like Ethereum and Bitcoin have to solve complicated puzzles in a process called proof-of-work. Check out our episode on that topic, but it means that a simple task now needs a lot more energy to compute.

But the main problem is another one... demand. The more gas fees someone is willing to pay, the faster their transaction gets validated. You can essentially pay to jump the queue. And when people are willing to pay millions of dollars for a single NFT, they don’t really care to bid a few hundred over average gas fees to get the deal done asap.

That’s why there are many projects that focus specifically on making transactions fast, and affordable.

And next time, we will talk about smart contracts and how they work.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Real world use cases for blockchains

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s stop exploring the theory, and instead talk about ways that blockchain technology is already used to solve real problems.

But first, remember what blockchain technologies actually do very well: They create a decentralized system of record, one that can not be falsified or altered without consent.

Arguably the most popular use cases are NFTs. Those non-fungible tokens are used to sell ownership of digital art. Without the need for commission-hungry art galleries or auction houses, artists get access to a worldwide audience to sell their art. Talented teenagers make life-changing money, and known artists expand their audience.

Another great use of blockchains are stablecoins. Those crypto currencies are tied to the price of a stable currency, for example the US dollar, and are already being used as payment methods in places where people don’t have easy access to bank accounts, and will likely never need those either thanks to crypto.

Those stablecoins are also really practical if you need to pay someone abroad. Before crypto, it required high transaction fees and an complicated wire transfers to send money to a worker or family member in a different country. Now, things are instant with almost zero fees.

And there are tons of other uses - hundreds of billions of dollars are tied to lending and financing on the blockchain for example. So! Next time, someone tells you there are no real world uses for crypto, you have some examples to share.

And next time we dive deeper into gas fees and why there are still some transaction fees when you use crypto.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s explore what a “metaverse” actually is and how it could become the killer use case for crypto.

Remember the movie “The Matrix”? In it, protagonist Neo discovers that he had been living in a computer simulation his entire life – a fake, but incredibly realistic world made up by evil machines to keep humans alive to harvest their energy.

That Matrix is the movie depiction of a metaverse, which is a virtual reality you immerse yourself in, interact with others, and you can do whatever that world allows you to.

Sounds futuristic? It is. But Virtual Reality – or VR – is getting better every day. You can already take a rollercoaster ride with a VR headset that is so realistic that you’ll scream in fear. Pilots train in VR and auto makers design cars with it. And because technology is advancing so quickly, companies like Facebook are betting that we will spend most of our time in VR in the not so distant future. They want YOU to escape reality and use THEIR metaverse.

Let’s say that reality becomes true. Why would that be good for crypto? Because in an entirely digital world, blockchains are ideal for payments, to document ownership of digital items, and to keep a permanent record of anything. We simply can’t use a real dollar bill in a virtual world. And if you spend most of your time in VR, you spend most of your money there too, creating huge potential for crypto.

And next time, we are stepping back into reality, showing you real world uses of crypto.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What are ICOs and what are they used for?

An ICO, which is short for “Initial Coin Offering”, is a way to raise financing for a crypto project.

You may already be familiar with IPOs - “initial public offerings”. This is when companies issue shares to be traded in public stock exchanges like Wall Street. In contrast, In an ICO, instead of shares, companies issue tokens as a representation of partial ownership.

Why do they do that? To raise good, old-fashioned, hard cash. Remember: Just creating a token or coin is easy and doesn’t do much by itself. The creators have to convince the public that their project has value in the first place, and get the tokens into peoples’ hands so that they can establish a market.

An ICO accomplishes just that. By putting their token up for sale publicly, those creators allow investors to buy a stake of their token in return for real money. If investors buy those tokens, the creators get to keep that money to work with. If things go well, it could be lucrative for investors to have gone in early, as they could potentially sell their holdings for gain.

But be careful, because the potential for abuse is high. With speculators rushing into crypto, hoping to ride a wave, lots of ICOs are just a scam. The creators never intended to build a real product and just take the money and run. Always do your own research and don’t trust any single resource.

And next time we’ll talk about what a Metaverse is and how it could become the killer use case for crypto.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

This is the second of our two episodes on decentralized finance, or just “DeFI” in short.

If you are just jumping in here, we recommend you listen to the previous episode where we explain why traditional financial products are nothing more than contracts traded and executed through banks.

DeFi gets rid of those banks, who act as a powerful middleman. But how does that work? Let’s dig in.

Remember that blockchains like Ethereum are “programmable money”. Crypto developers can just write any financial contract in computer code. That’s called a “smart contract”.

That could be a simple financial instrument like stock or options. And there are real advantages to doing it on a blockchain: First, since the contract is written in plain code and stored on the blockchain, anyone with the skills can read it, which creates full transparency.

Second, and most importantly, you don’t need banks facilitating these contracts anymore. Two parties can enter into those contracts directly through the power of a decentralized blockchain.

So, what are some popular examples? Take lending: You could lend someone Ethereum, and the smart contract determines how much interest you get, when you get the money back, and gives you a token in return that represents what you lent so ownership is documented.

Or ownership in a company: If you own what’s called a “governance token”, which represents a stake in the company or project that issued it, you have verifiable ownership, and may even get voting rights. It’s just like real stock, but on the blockchain.

And next time, we’ll spend more time on the subject of stock on the blockchain, and will explain what an ICO is!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today and tomorrow, we’ll dive into the world of DeFI, short for “decentralized finance”, where blockchains are used to replace the world of traditional banking.

In this episode, we’ll explain how the world of traditional finance works, so you understand where things are coming from.

Imagine sitting on the busy trade floor of an investment bank. What is actually going on here? People are busy on the phones, looking at screens, taking orders and placing orders on behalf of clients everywhere.

It might sound crazy simple, but those financial instruments being traded are all just contracts: Promises to get or give something in return for a payment, often at a specific date. Take stocks for example. If you buy one Apple stock for $150 dollar, in return you get to vote on shareholder proposals - it’s nothing more than a controlling interest in a company. It just happens to fluctuate in price, so you might make money holding it.

Or take options as another example: Those are contracts to agree to buy or sell stock for a predetermined price at a later date. It’s essentially a gamble on the future value of that stock.

Those traders on the trade floor, what do they do? They sit in the middle, matching buyers with sellers, to make transactions happen, and then collect a fee. In other words, they are a centralized institution.

And that’s the whole point of DeFi, to create a decentralized system that can do all of that, cheaper and better. And next time, we’ll explain how traditional contracts work in the DeFi world.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What are crypto ETFs?

You always know that things are going more mainstream when the media talks about it. Recently, there has been a lot of talk about those “crypto ETFs”. But what are they?

In simple terms, crypto ETFs make crypto investing possible through a regular stock portfolio. To understand how that works, we first need to understand how ETFs work.

ETF means “exchange traded fund”. ETFs have been around since the seventies. They are financial instruments that are traded just like stock. They have a price, a ticker, and you buy them through your traditional brokerage account.

But instead of representing a direct investment in just one company, ETFs allow you to invest in a portfolio. ETF managers buy and sell several individual stocks, balancing out their portfolio constantly, and you don’t have to worry about trading each of these yourself. Are you familiar with popular funds like Vanguard tracking the SP500 here in the US, or the DAX index in Germany? Those are ETFs.

Bitcoin and crypto ETFs give you the same convenience, but instead of investing in publicly traded companies, the funds invest your money in – you guessed it – crypto.

There are a few reasons why that’s useful: First, it’s much easier to get crypto exposure through your existing portfolio than having to set up a separate crypto exchange account. Second, some ETFs track a portfolio of different crypto, meaning you just have to buy one ETF and they do the work for you. And third, without those ETFs you might not be able to trade crypto directly sometimes, say through a retirement account that only allows you to trade traditional equities.

And now that we have talked about the bridge between the old and the new trading world, next episode we’ll talk about financial innovation that happens entirely in the world of DeFi and what that means.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: How do crypto scams work?

Whenever there is money involved, scammers are not far away. In crypto, people use the term “rug pulled” - which means someone pulled the rug from under you and your investment tanked. But how does that work?

It’s easy to create your own coin and hype it. In fact, don’t trust anyone promoting a crypto currency on TikTok and the like – people pay tens of thousands of dollars to those influencers to create a fake image of popularity for a specific coin. It works like this: Scammers buy a large amount of a very low value coin for next to nothing. Then they pump a ton of money into promotions, and if people start buying into the scam, prices shoot up. Suddenly the scammers' holdings are worth a lot more than they spent on promotions and they will sell it all. And because they own so much, the minute they sell it, your value plummets.

That’s called a “pump and dump”. So be on the lookout for anything that looks fishy and only trust third party resources. Anyone can create a coin, a website, and pay influencers.

It’s tempting to make a quick buck and seemingly everyone does these days. But always ask yourself: Does that all actually make any sense?

And next time we’ll explain what Crypto ETFs are.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: How do you know if a token is a good investment

First things first! This is not investment advice, and crypto is massively volatile. Do not invest what you can’t afford to lose entirely. Always do your own research. In fact, today, we’ll talk about some of the things you might want to look for when doing exactly that.

So, you’ve found this coin and consider investing some money. What should you take into consideration?

We would ask ourselves two things: Is this a legitimate project with good intentions? And does the technology have future potential?

The first is pretty clear: There are a lot of scams out there and we’ll talk about them in more depth next time. But there are warning signs you can listen to: How much is owned by just a few people? How long has a project been around? What do people say about it in forums? Are decisions made through the community or by an anonymous few?

Also important: Market capitalization, meaning how much money is invested in a coin. While getting in early may pay off, consider that a young token with little money behind it is more likely to be a scam.

Secondly: Does this solve any problems that existing technologies don’t? The fundamentals are that transactions are fast and cheap, and a blockchain can handle many of them at the same time. But also consider if it solves a new use case that could make it very popular. A good way to think about it is: Will a lot of people likely still use this in 10 years?

That’s just a small list and you will add your own ideas to it over time. And next time we’ll talk about the making of bitcoin scams, so you can spot those from a mile away.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.