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Crypto Currency and the learning/investment opportunities for Youth

In this first initiative we explore the world of Crypto Currency and the learning/investment opportunities for youth

Backgrounder: Articles to provoke thought and to compare past, present and future practices - are you ready?

Back in the day, kids learning financial literacy saved their allowance in a piggy bank, and crossed the basics of budgeting. These days, things may be a little more high-tech. Several initiatives have launched targeting children in a bid to teach them about cryptocurrency. Many children are already familiar with digital payments because of their experience with video in-game purchases and tokens, as well as pre-paid credit and gift cards. It is not a big step to introduce them to cryptocurrency or "internet money". Unlike many adults, kids will have no fear trying this out and will find it pretty cool that they can invest in something like this.

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One of them is Piggy Coin, a cryptocurrency designed for kids. Earned by playing educational games online, and spent in a network of different online stores, Piggies are built using the same underlying principles of bitcoin. One nice thing about them is that parents can even give Piggies to their children in exchange for doing chores. Because Piggies are stored in a software or paper wallet, like Bitcoin, and spendable online, it’s a novel way to teach young ones about finance. We talk more specifically about Piggy Coin in future articles.

Some of the cryptocurrency ventures targeting children include online virtual worlds. Online company recently released a way to play a popular online game Minecraft, while adding bitcoin in the process. It hopes that the system will help kids to understand how money works, while giving them something that they can spend in the real world. Minecraft has become a worldwide phenomenon since its launch in late 2011. Available on a variety of platforms, it features a vast, randomly generated world built with blocks, made of different materials. Players can ‘mine’ the blocks for their raw materials and use them to build vast, complicated structures of their own.

Children get lost in the game, which offers limitless possibilities for play. Such was the success of the title that Microsoft eventually bought it in 2014. Conferences and competitions have sprung up around it, and it has created an array of YouTube celebrities who play the game while others watch. Stampy Longnose’, aka Joseph Garrett, has 333,000 followers and his Minecraft series is hugely popular with kids. Minecraft can be played in standalone mode, but one of its big draws is the ability to share worlds together online. Many players can play on these Minecraft servers at once, interacting with each other in the virtual world.

Online gaming company PlayMC has married Minecraft with bitcoin, allowing people to earn and spend the cryptocurrency in its online world. It now hosts a Minecraft server with its own ‘Bitomony’. It has created its own currency, called Bits, that players can exchange during the game. Each bit is worth 100,000,000th of a bitcoin. This makes it equivalent to a Satoshi, which is the smallest possible fraction of a bitcoin that can be exchanged on the bitcoin blockchain.

PlayMC features games inside its Minecraft server, such as Archer Games, a last-person-standing game in which players take pot shots at each other with bows and arrows. Another is Wave Fighter, in which you can lay traps for relentless waves of bad guys. Kids that play these games will earn Bits when they win, but in time there will be other ways to earn, such as bug reporting and voting on things. They’ll be able to withdraw bitcoins when they reach a threshold, enabling them to spend the digital currency on other things.

This isn’t the only way that kids can get involved in virtual currencies. Roblox, another online virtual world, also targets children. They can use free software tools supplied by the publisher to create their own in-world games, and can then charge each other units of the in-game currency, ‘Robucks’, to play them. They can sell merchandise in the game, too. One enterprising teenager began coding his own games within Roblox, and now earns the equivalent of $20,000 each month in the currency. Not bad for someone on the verge of leaving high school.

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One of the biggest differences in investing in digital currencies such as Bitcoin versus the stock of various companies, is the cost involved. Each stock purchase can come with a hefty fee and minimum purchase requirements. If you are spending hundreds or thousands of dollars on each stock purchase for a child, you need to make darn sure they pick one that will stand up to Grandpa's scrutiny.

With cryptocurrency, minimum purchase requirements vary depending on the exchange, but .0001 bitcoin (less than 5 cents) is a common amount. With currencies priced to the eighth decimal, fractions of a single coin can be purchased - this also makes a great math workout for kids. The exchange trading fees are miniscule - for example, Poloniex charges only .2%. You must be 18 years of age to sign up for an account at an exchange, so a parent or guardian will have to help with this. Mastering how to buy and sell on an exchange can give them the confidence to manage their own investments when they get older. Having an extremely low cost base like cryptocurrency, allows children to make mistakes without suffering financially. They can learn some very valuable lessons through the experience of picking their own investments.

At this early stage of development, Cryptocurrency is a high risk investment, so never invest more than you can afford to lose. I recommend testing the waters by giving up a non-essential purchase you would have spent money on anyway and using those funds to make your currency purchase. If you are investing more than a few experimental dollars, do your due diligence and fully research the currencies you choose.

If you aren't quite ready to let your kids buy cryptocurrency, you can create a practice game at home or at school. CoinMarketCap lists the market cap, price, supply, 24 hour volume, % price change, and a price graph of over 600 digital currencies. To make life easier, have the children select a few currencies from only the first page or two. Record today's price as well as how much they bought of each and then follow up each week updating the price. Some of the currencies have wild price swings and not all of them are trustworthy, but this is a good teaching tool to cover those topics as well. A competition could be held with each child receiving a certain dollar value of play money to invest, with the winner having the best performing portfolio after a certain time frame. Either way, kids will begin growing and tracking their investments through the ups and downs, and be on their way to join the ranks of the financially educated.

In this series of articles we'll take a closer look at exploring other educational articles and videos so your children/youth can learn all about Cryptocurrencies and the exciting opportunities which lie ahead and how they can learn and invest early to get ahead of the herd (they are coming).