For many of us, 2020 was a year of contemplation and retrospection so, to dial things up a notch, we’ve decided to make life more action-driven for the upcoming year. Therefore, in honour of 2021, we have launched our ‘New You’ series, where we promise to hold your hand as we lead you into uncharted territories, explore novel experiences, ideas or opportunities and embark upon exciting new adventures. You know... the sort that linger in your mind from one year to the next but which haven’t quite yet materialised…
At least not until now!
As part of this ‘New You’ series, Edible Health have decided to boldly venture into an unknown world of crypto currency. With words like Bitcoin and Blockchain becoming more common and companies like PayPal, Visa and Mastercard all talking about these new ‘digital coins’, we decided to grab the bull by the horns and tick this one off our 2021 list!
So, after a chance meeting with one of our team at a coworking space in Bulgaria, we are therefore delighted, and deeply grateful, to have been given the opportunity to interview Anja Schuetz - a self-taught crypto currency whizz who now supports others - especially women - with their journeys into the world of digital money.
And, as if that wasn’t enough crypto action for 2021, Edible Health has braved new frontiers to now become the first collagen company in the world to accept payment in crypto currency. So, as well as taking Pounds, Euros and Dollars via PayPal, we can now take Bitcoin, Ethereum, Litecoin and more via Coinbase!
Now, we know it’s easy to feel overwhelmed by new technology, not to mention new terminology - we’ve been there! But just hang tight, grab a collagen cuppa and settle down to learn from Anja who will demystify and simplify in ways that will not only help you get ahead of the game, but which may also help you discover a ‘New You’ with this ‘New Money’....
Anja loves data and spreadsheets. However, an affinity for numbers didn’t make her an overnight cryptocurrency expert. On the contrary, Anja spent more than a year watching, listening, reading and learning everything she could get her hands on about crypto before she made her first investment. Now she’s sharing her knowledge - much of it for free - in the hope it encourages crypto investing virgins to consider alternative forms of managing their money.
Thanks, Anja, for your time. What is your involvement in cryptocurrency?
My ‘day job’ is working as an Operations Management / Customer Service Consultant with blockchain/crypto start-ups. I basically set up customer service departments for small businesses. I worked previously in the corporate fashion world, then in the self-development industry.
As a result, my crypto consulting work is not a full-time career. That said, I have created a free seven-day ‘Introduction to Bitcoin’ email series to which anyone can subscribe. It’s a great sounding board for those who are really new to the concept and need a solid basic understanding. Those who want to go further can join my patreon community for a nominal amount (approx ten euros) per month. That gives them access to ongoing news, information, and I answer any questions they might have. I can also provide one-to-one sessions. In addition, I have a section on my site that lists ways you can earn crypto for free, so this is a great springboard to getting involved without investing straight away.
I am doing this because I want to see more people invest in cryptocurrency and take control of their finances. I am particularly motivated to help women investors. I really don’t want to see women miss out on this.
Please tell us a bit about yourself and what led you to this point of offering crypto currency coaching.
I am German, and therefore I come from a culture of savers! We love to save and be sensible with our money. Parents raise their children to save, save, save! So I was brought up with this mentality, and I certainly adopted it. But then, after having lived for some time in The Netherlands, I returned to Berlin and started asking myself questions, such as:
- Who do I want to be in Berlin?
- Am I in a rush to make money?
- Where is my money invested and how is it working for me?
I essentially audited how everything was going, and I was left very disappointed. My savings in the bank were generating practically no interest. The pension plan I set up when I started my business was going nowhere. I realised that I needed to take my money matters into my own hands.
How did you take control of your finances?
I registered in a year-long investment and trading course. Up to that point, I had explored other investment avenues through assets et cetera, but what I had never done was study and understand the stock market. As it turned out, I learnt many upsetting things about how our traditional money systems work and how corrupt things can be. I really didn’t like what I was discovering. Sure, it was great to be able to now read trading charts and understand investment strategies, but I wasn’t inspired to actually start investing in it.
During this course, I heard about the concept of Bitcoin. In fact, it was a fellow student who asked the trainer about it. The response was instant - the trainer urged us not to touch it. It was too volatile and dangerous, he said. My intuition told me to do the opposite though, and so I began looking into cryptocurrency. I fell down this rabbit hole and I’ve never come out of it. The moment I shared my enthusiasm about cryptocurrencies with the group, the trainer kicked me out of the course, but I didn’t mind. I just took all the technical information I needed from it, and used that to my advantage as I started to explore Bitcoin.
What is the difference between Bitcoin and cryptocurrency? You’ve used both terms.
I should not use them interchangeably, as there can be fundamental differences. Bitcoin is the original cryptocurrency and by far the biggest and the most established one.
In that case, can you explain what cryptocurrency is, please?
Sure! Essentially, it is digital cash. This is one of the simplest and most important explanations. Some crypto terms sound techy and nerdy, and plenty of them are (for good reason). However, we don’t have to deal with a lot of the geeky stuff. It works exactly like physical cash in our wallets, only that it is digital. Cryptocurrencies are decentralized, meaning there is no third party involved when we send Bitcoin from one person to another. It’s like passing a pound, euro or dollar to someone in a room. It’s fast, direct, secure and for the most part, there is no service provider required to facilitate that transaction.
That’s cryptocurrency in general, and it’s what Bitcoin set out to be.
So, cryptocurrency is digital cash and Bitcoin is one type of digital cash?
Yes, however, right now, Bitcoin isn’t being used as digital cash (yet). Maybe it never will be. The community decides what they use Bitcoin for, and right now it is being regarded as digital gold, rather than digital cash, since it is still too slow compared to traditional payment methods, and the transaction costs can be quite high, too. That’s why there are other cryptocurrencies that address this issue and aim to become faster and less expensive than Bitcoin, as well as traditional methods like credit cards, in order to be adopted as digital cash one day. We will see if some of them will be adopted in the coming years, or if Bitcoin will turn into the best digital cash after all. For now, Bitcoin is a sturdy slow-mover that you’d turn to for investment goals that won’t lose value in the long-term, rather than quick access. You’d never think to go to the supermarket and pay for something with gold, for example. Bitcoin is a bit the same. While there is certainly a growing list of merchants that accept Bitcoin, most people invest in it with the intention of leaving it to sit for quite some time.
So what are the benefits of cryptocurrency?
Regardless of agility, cryptocurrency cancels out the middleman. That is not the case if, for example, you are paying someone online via a provider such as PayPal, or your own bank. The money leaves your account, it goes to a third party, and from there it goes to the person ultimately receiving the funds. However, in that transition process, your funds are, to a degree, vulnerable. You have to trust that nobody will hack into the system at some point. Plus, all your transactions are registered on a central ledger of that service provider and you lose the privacy of cash. A lot of crypto users and investors very rightly don’t have much trust in conventional systems that are governed or managed by a central authority anymore. Instead, they trust in the revolutionary blockchain technology. The Bitcoin blockchain is a decentralised network, based on open source code, that provides you the privacy of cash and allows anyone to participate, no matter who they are or where they live. This contrasts with our current money system, in which two-billion people do not have access to a bank account.
So cryptocurrency gives you control of your money by avoiding middlemen like banks, plus is more private and safer because it is based upon systems that can’t be hacked?
Yes. The Bitcoin blockchain is the most battle-tested technology in the world, and has not been hacked in its 12 year existence. It is run and secured by “miners” (computers) that validate transactions and prevent fraud. The fact that it is borderless and does not fall under the jurisdiction of any government or central bank also means that the Bitcoin price is not affected by regional financial crises. That's why people in countries with hyperinflation (Venezuela, Argentina for example) use it as a safe haven to bring their money to safety. And more and more people in the rest of the world turn to it in order to protect themselves against a growing inflation of their own currencies.
Can you give us a sense of scale of the crypto world?
Yes, this can be looked up on sites like Coingecko.com in real time. I am going online now… And right at this moment (21st December 2020) it is valued around 510-billion euros.
So, how are funds kept safe in the crypto world?
Great question! This is much more important than where or what to buy!
Cryptocurrencies are stored in digital “wallets”. There are “custodial” and “non-custodial” wallets in the crypto space and while these may be unfamiliar words for many, it’s actually very similar to the tools and services we are using on a daily basis in our traditional financial system:
What are custodial services?
These are third parties that store your money for you. If you keep your money in a bank account then your bank is the custodian of your money. It is in the control of the bank, and you trust the bank to keep it safe and give you access to it whenever you need it. You’ll receive login details and if you forget them, your bank will give you new ones.
It works the same way in the crypto space. In theory, you can keep your crypto funds on the online exchanges on which you purchase them, and trust them as a custodian. They’ll give you login details and your data will be stored on their central server. Should you ever lock yourself out of your account, the Customer Support will be able to access your data and help you out.
I just said “in theory” because it is absolutely not recommended to leave your funds in the custody of those exchanges. Crypto exchanges are the most attractive targets for hackers, and you can’t trust them as much as you trust a bank that’s been around for more than 100 years. If the exchange’s website is down tomorrow, you won’t have anywhere to log in and access your money. There are too many more reasons to mention why you shouldn’t leave your funds there.
So, what are self-custodial services then?
If you keep your cash in a secret jar at home or in your physical wallet - this is a “non-custodial” or “self-custodial” way to store your funds. You are the custodian of your money and 100% responsible for keeping it safe. With crypto, self-custodial services are basically ‘self-hosted’ wallets that give you 100 percent control and are ways of enabling you to withdraw your funds and store them. These wallets have different security levels. They come in the form of apps for your phone or computer, or small hardware devices that you connect to your computer. In either case, your access details are stored directly on your device - not on a central server somewhere. Nobody but you has access to them, therefore you need to be your own ‘helpdesk’, should you ever lock yourself out of your wallet.
So how do I protect my wallet ‘in case of emergency’?
In order to be your own helpdesk in case of emergency, you will have to ‘back up’ your wallet. In the crypto space, ownership of funds is proven by private keys rather than by your identity or some legal contracts. Backing up your wallet simply means keeping a secure copy of your private keys. This actually translates to nothing more complex than writing down a set of 12 (or 24) recovery words that your wallet generates for you.
So I protect my wallet by making a note of private keys (which are a set of secret words unique to me)?
Yes. Those 12 or 24 words have many different names: back-up phrase, recovery phrase or mnemonic seed. They all refer to the same thing: a set of humanly readable words that you should write down and keep offline. Always remember where to find those words, and always keep them away from strangers. Whoever has those words will be able to access your money.
Sadly, many beginners are not aware of the importance of those 12 or 24 words, or they keep ignoring the backup reminders of their wallet. But those words are the MOST important thing about your wallet. They are literally the key to your money. They are more important than the wallet itself. You can lose the phone or computer on which your wallet is installed but as long as you have those 12 or 24 words you will be able to access your funds on a different device or different app.
So, if you ever lock yourself out of your wallet - as long as you have a back-up of your keys (recovery words), you can always let yourself in again.
There is a lot more to say about wallet security - I literally wrote a whole book on it! One important tip is this: the more offline you can keep your wallet, the more secure it will be. That’s why external hardware devices are considered a lot more secure than free apps on devices that are constantly connected to the internet.
To summarise: The big question when choosing where to store your crypto is really about trust: Do you trust a third party to keep your coins safe, or do you trust yourself to keep a set of 12 or 24 words safe?
Edible Health’s Summary so far:
Crypto currency is a form of digital cash and is a way to control your money without middlemen. Bitcoin is the original crypto currency, but there are now thousands of others in a marketplace worth over 500 billion Euros where Bitcoin is used more for investing (like gold) than for transacting with. When you purchase digital currency you can choose to store that digital cash online with a third party custodian (not recommended) or look after it yourself using an online (eg app) or offline (eg USB-type device) wallet which you protect and back-up by using a set of 12 or 24 words which you have to keep safe and secret.
You mentioned that one person can transfer coins to another directly, but what happens if you make a mistake and send your coins to the wrong person?
Every person will have their own unique address (like your own unique bank account) so, unless you know the person connected to the mistaken address, which is very doubtful, those coins are lost. Presently, you would have no recourse as you might do in the traditional investment world. This is because on this decentralised network, every address can only be accessed by the owner of the keys to it. There is no central authority or third party that has any power over it. There is a famous quote in the crypto space: “Not your keys, not your coins.” This is good news when it comes to having full ownership of your funds but can be bad news if you lose your keys or accidentally send funds to a wrong address. It is believed that about 5-million of the 21-million Bitcoin are “lost”, meaning their owners cannot access them anymore.
Can you be scammed with crypto currency?
Yes, many scammers exploit the privacy and ownership feature, so be aware. For instance, they will say, “just send X amount to this address and we will send you 3X back”. Unfortunately, many people believe this, follow the instructions and of course never receive anything in return. And, once again, there is no recourse for this, so the money will not be returned. That said, if someone said “send me £100 and I will send you £300 back” you’d likely question their motives, so the same common sense is required.
Cryptocurrency also gets a bad wrap as a volatile finance, doesn’t it?
Yes, it is very volatile when you focus on the short-term. This is largely in part to the newness of it. It’s really only a decade old. If you look at the overall long-term trend, though, you will see that it consistently goes up. We have just reached another new all-time-high. That’s why more and more long-term investors are seeing this as a safe haven. Some people have lost trust in governments, some people fear for the security and devaluation of their savings due to inflation. And some people want to be able to transact privately in their lives. These are the kinds of people who are turning now to Bitcoin and other cryptos. But the price (or exchange rates) of crypto currency is changing daily, hence why it is referred to as being volatile.
You’ve explained why some people would invest in crypto. What about who invests in crypto?
Initially, of course, it was the crypto geeks and anyone whom this new currency solved a problem for, who were turning to Bitcoin. As a result of its semi-anonymity, it garnered favour with the underworld. Those who needed to transact with a high amount of privacy were turning to Bitcoin, and so it was becoming a bit of a go-to currency and transaction platform for the dark web. However, it’s important to note that Bitcoin is private, but not anonymous. All transactions are transparent and visible on the Bitcoin blockchain (though without any identities attached) and with better and better analysis tools they will be traceable. Anyone can see any transaction that takes place anywhere, between anyone. What we can’t see is the actual names of individuals associated with the transaction, just the public Bitcoin addresses. That has helped make it less attractive to people from the dark web, who are now using cryptocurrencies like Monero, which are truly anonymous. However, in light of global economic events and current affairs in the last five of six years, retail investors - individuals such as myself - are entering, and over the last few months we have seen more and more adoption by institutional investors
Microstrategy’s investment into crypto earlier this year has also really prompted a surge of wider interest, hasn’t it?
Yes. Microstrategy’s CEO Michael Saylor made investment history when he spearheaded a move towards crypto. For the first time ever, a NASDAQ listed company invested some of its funding into crypto. This was HUGE. It created a tsunami of interest. As a result, I think we are going to see more institutional investors move into this space. This, in turn, will trickle down to smaller investors who seek reassurance and take cues from how the bigger players operate.
Is cryptocurrency regulated?
Bitcoin is more regulated than any other currency, but as previously mentioned, this is not by a central authority. It is regulated by a ‘consensus mechanism’; the regulation is essentially written in the blockchain code. If you don’t follow the rules, then you can’t participate. You have to follow the rules. They are incorruptible. It operates on a decentralised network, so no single person can change the rules. That’s in part what makes it so special. Yes - countries are trying to regulate this. But can they? Should they? These are big ethical questions. The cryptocurrency governs itself, it doesn’t need any of the power structures or technical structures of our traditional money system in order to function. In a way, it is a societal experiment and its success depends on whether more people will adopt it and participate in it. The reality is that people can make suggestions for improvements, and then it’s up to the community whether or not they are adopted.
A now legendary example of this is the birth of Bitcoin Cash, a cryptocurrency which came about as a result of a fracture within the Bitcoin community. Part of the community wanted Bitcoin to become a better “medium of exchange” by making it faster and less expensive. The other part was happy with keeping Bitcoin the way it was - a “store of value” for now. Since no consensus could be found, the Bitcoin blockchain split and became two coins: the original Bitcoin (BTC) and a new currency Bitcoin Cash (BCH).
Further Edible Health Summary:
Crypto currencies require you to be allocated a unique address (sort of like your bank account number) so that you can send and receive digital cash. These addresses are critical for the transactions, so losing this information or sending to a wrong address or falling foul of scammers asking you to send coins to their address could mean you lose your money, without recourse. On top of this, because the market for these currencies is still very new, it is therefore very volatile and the value of your coins can go up and down dramatically. However, many normal people alongside large corporates and institutional investors (eg fund managers) are now investing in digital cash because they see it as a safe haven for their money, in the long term, given the current global economic status, and many are choosing crypto currency over traditional banks and paper money because the crypto blockchain is managed by the community and not controlled, taxed (with fees), surveilled or regulated by the government or private banks.
Can you find out who is behind a cryptocurrency before you invest?
I wish more people asked me this question more often! This is a much better question to ask yourself, as opposed to the usual, “What coin should I invest in?”.
Before I go into that, it’s important to distinguish the original Bitcoin from any other “altcoin” (alternative coin) that came afterwards. We do not know who the creator of Bitcoin is. Bitcoin came about “organically” - many people simultaneously worked on creating cryptocurrencies for decades, and then Satoshi Nakamoto - the ‘anonymous’ person/s who wrote the Bitcoin whitepaper - sort of delivered the final piece of the puzzle by putting it all together in the right way. Since then, Bitcoin has spread organically, like a digital mushroom, without marketing and without a company behind it. People simply started mining it, developing tools for it, or buying and using it.
Therefore, everyone needs to make their own decision on how “not knowing who the creator is” affects their trust in Bitcoin, before they begin to participate. Some make the argument that you don’t know who made the chair you’re sitting in, but that doesn’t stop you from using it. Some people believe Bitcoin was “discovered” rather than created.
Any other cryptocurrency or crypto asset that was created after Bitcoin (and there are thousands of them) has a developer team or company behind it. When it comes to investing, they could therefore be viewed as business startups and their crypto token could be viewed like shares in a company. As a result, it is important to ask some fundamental questions before deciding to invest in any of the currencies offered by these organisations.
There are listing services, such as www.coingecko.com where you can see all the currencies listed in order of their current market capitalisation. Click on any of those listings and you will be taken to the currency’s site for further information. However, this is quite a laborious way to research. It’s akin to going through a phonebook.
Instead, I would suggest you immerse yourself in the crypto community - follow people on Youtube and social media. So many experienced investors are posting daily. You can keep your ear to the ground and learn from them. This is much like traditional investments, in that you have to do your homework. In the same way with conventional businesses and their founders, some crypto developer teams might just be in this for a quick win, and they may abandon their project. Some may not be that well funded and go bust. So, the most important question is: Does this project solve an actual problem that the world needs? You wouldn’t just throw your money into anything in the traditional finance/stock market system without making some enquiries, or doing research into the company you want to buy shares in. Well, it is no different when it comes to investing in crypto assets.
What are some common misconceptions about crypto currency?
Well, we’ve already covered off one of the big ones, which is that it is a place only for those who operate on the dark web.
Another one I would say is that Bitcon is not anonymous, as many people think. It’s private, and there is a difference. Again, we have touched on this. If I send you Bitcoin, my address sends to your address. Everyone can see that transaction. Our names aren’t attached to the addresses, but we both know each other’s addresses now and can literally look into each other’s wallet. It’s all visible on block explorers like blockchair.com for example. There are, however, currencies like Monero that, as I’ve already mentioned, are truly anonymous.
What are some common mistakes made by new investors starting out?
Most mistakes pertain to security and keeping your coins safe. So, hacking cryptocurrency has caused some backlash towards the concept. However, it’s important to note that most hacks occur when money is with custodial service providers, such as the converting agent. The Bitcoin blockchain is impenetrable. It has never been hacked and experts believe it never will. The hacking has occurred when people have had their money with crypto exchanges, for example, and then they leave their coins there, rather than transferring them straight to their wallet. Also, when starting out, some people don’t fully understand the concept of the private key, and somehow make that available, thus essentially handing control and ownership of their funds to a stranger/hacker/thief.
Other mistakes beginners make lead to losing their funds. I spoke earlier about wallets. People who are not aware of what self-custody means often do a factory reset on their phone, which erases all their local data. Then they open their wallet app and wonder why it’s suddenly empty. Well, all the data and keys stored on the device were erased. They then contact the customer support of the wallet app thinking that they can just reset a password or something. But since all the data was stored locally and the wallet provider has zero information on them, that’s not possible. The only way they could help themselves now is by looking up their secret 12 or 24 words and entering them in the empty wallet app. This would instantly restore their funds. But if they don’t remember where they keep those words or they never wrote them down in the first place, their funds are lost forever.
Can you withdraw your cryptocurrency and convert it into traditional money at any time?
Yes, you can. Just like you can buy Bitcoin (or other cryptocurrencies) with Euros or Dollars or any other local currency on online exchanges, you can also convert them back on the same exchanges.
What’s the best advice you’ve been given, or the best advice you can give, to someone starting out investing in crypto?
It’s like an old record, but for good reason as it applies to every investment you ever make.
Don’t put in more money that you can afford to lose.
Don’t invest money you need to live from, or pay your rent from. Invest only what you can comfortably set aside and not to rely on for any reason, including unforeseen problems (eg like a costly health scare).
I am not here to advise clients on where to invest, that decision rests with them. I help educate them and arm them with the knowledge tools they need to go about it. However, if my clients choose to invest in Bitcoin, then I do suggest that they regard it as a long-term strategy. Don’t get caught up in the short term fluctuation. For me, Bitcoin is my pension plan, so I look at it on a time scale of 20 - 30 years.
Final Edible Health Summary:
If you want to start investing in crypto, research the companies behind the currencies, although remember that Bitcoin is not owned by any company, it’s owned by the community. Also remember that Bitcoin may be private but it is not anonymous, so transactions are visible, although other coins do offer anonymity. And don’t make the rookie mistakes of leaving your money on exchanges or with custodians who could get hacked, or losing your private keys (recovery words). Finally, you can swap your digital money for conventional money, or vice versa, at any time, but beware of the high volatility of the crypto markets and never invest more than you can lose. Perhaps think of crypto as more long term, like a way of saving or as a form of pension, unless you are a professional trader.
A huge thanks to Anja for her time and incredible generosity in sharing all this knowledge. We hope it serves as an easy introduction for you into cryptocurrency. If you’re inspired - start researching, following, learning and understanding as much as you can and don’t forget to check out Anja’s free and paid for support services.
The information we have provided herewith, and all linked materials are not intended nor should they be construed as investment or financial advice. Moreover, the information herewith should not be used as a substitute for professional investment or financial advice. Please refer to our Terms and Conditions.