Crypto & Digital Assets

The pizza that cost $780 million

On May 22, 2010, a programmer named Laszlo Hanyecz paid 10,000 Bitcoin for two Papa John's pizzas. At the time, those Bitcoin were worth about $41. It was the first known real-world purchase using cryptocurrency — now celebrated annually as "Bitcoin Pizza Day."

At Bitcoin's all-time high of roughly $73,000 per coin in March 2024, those 10,000 Bitcoin would have been worth over $730 million. For two pizzas.

But here's the other side of crypto: in November 2022, FTX — one of the largest crypto exchanges in the world, valued at $32 billion — collapsed in days. Founder Sam Bankman-Fried was convicted of fraud. Customers lost billions. Bitcoin itself dropped from $69,000 to $16,000 over the course of 2022. People who bought at the top lost 77% of their investment.

Crypto is the most polarizing asset class in history. Some see it as the future of money. Others see it as speculative gambling. The truth, as usual, is more nuanced — and understanding the basics will help you make your own informed decision.

What cryptocurrency actually is

A cryptocurrency is digital money that uses cryptography (math-based security) to verify transactions and operates on a decentralized network — meaning no single bank, company, or government controls it.

Traditional money works like this: you trust your bank to hold your money, and the bank trusts the Federal Reserve to back the system. Crypto works differently: instead of trusting institutions, you trust mathematics and code.

The key pieces you need to understand

There Are No Dumb Questions

"If no one controls it, who decides the rules?"

The rules are written in the code (protocol). Changes require consensus among the network participants — developers propose changes, and the community (miners/validators and node operators) decides whether to adopt them. Major disagreements have caused "forks" — where the network splits into two (that's how Bitcoin Cash separated from Bitcoin in 2017).

"Is crypto actual money?"

It depends on how you define money. Bitcoin meets some criteria: it's a store of value (debatable), a medium of exchange (accepted by some merchants), and a unit of account (you can price things in it). But its extreme volatility makes it impractical as everyday money — you wouldn't want your salary to drop 20% in a week. Most people treat crypto as a speculative investment, not a currency.

Bitcoin vs everything else

There are over 20,000 cryptocurrencies, but the vast majority are worthless or near-worthless. Here are the ones that matter:

DeFi: decentralized finance explained

DeFi (Decentralized Finance) is the attempt to rebuild traditional financial services — lending, borrowing, trading, insurance — without banks or intermediaries, using smart contracts on blockchains (primarily Ethereum).

The promise: financial services accessible to anyone with an internet connection, 24/7, with transparent rules written in code.

The reality: DeFi is still experimental. Smart contracts can have bugs (hackers stole over $3 billion from DeFi protocols in 2022 alone per Chainalysis). There's no FDIC insurance. If you make a mistake — send funds to the wrong address, fall for a phishing site — your money is gone permanently. No customer support line to call.

There Are No Dumb Questions

"Should I put money in DeFi?"

Only if you fully understand the technology, are prepared to lose everything you put in, and it's money you can genuinely afford to lose. DeFi is the bleeding edge of finance — exciting, innovative, and extremely risky. Most beginners should stick with buying Bitcoin or Ethereum on a regulated exchange until they've spent significant time learning.

"What about NFTs?"

NFTs (Non-Fungible Tokens) are unique digital tokens that can represent ownership of art, music, or other digital items. The 2021-2022 NFT boom saw million-dollar sales, but the market crashed dramatically — trading volume dropped over 95% by 2023. Most NFTs purchased during the boom are now worth a fraction of their purchase price. The underlying technology has legitimate applications (digital identity, ticketing, provenance tracking), but as speculative investments, NFTs have been devastating for most buyers.

How to evaluate any crypto asset

Before putting a dollar into any cryptocurrency, run it through this checklist:

Crypto in your portfolio: how much?

Most financial advisors who acknowledge crypto suggest a maximum allocation of 1-5% of your total portfolio — and only after you've built an emergency fund, paid off high-interest debt, and maxed your retirement contributions.

Where to buy (for beginners)

Taxes on crypto (yes, you owe them)

The IRS treats cryptocurrency as property, not currency. This means:

Short-term capital gains (held less than 1 year) are taxed at your regular income rate. Long-term gains (held over 1 year) are taxed at preferential rates: 0%, 15%, or 20% depending on income. This is a strong incentive to hold for at least a year before selling.

There Are No Dumb Questions

"What if I lost money on crypto?"

You can deduct up to $3,000 in capital losses per year against ordinary income. Losses beyond that carry forward to future years. Many people who bought crypto in 2021 and sold in 2022 used these losses to reduce their tax bills — this is called "tax-loss harvesting."

Key takeaways

• Cryptocurrency is digital money secured by cryptography and running on decentralized networks (blockchains). No bank or government controls it.
• Blockchain is the underlying innovation — a tamper-proof, transparent digital ledger with applications far beyond currency.
• Bitcoin and Ethereum are the two most established cryptocurrencies. ~99% of other projects will go to zero.
• DeFi rebuilds financial services without banks, but is experimental and extremely risky. Smart contract hacks are common.
• Crypto should be 1-5% of your portfolio at most — only after emergency fund, debt payoff, and retirement contributions are handled.
• Evaluate any crypto by checking: what problem it solves, who built it, code audits, tokenomics, real adoption, and regulatory status.
• Crypto is taxed as property — selling, trading, and earning crypto are all taxable events. Hold over 1 year for lower capital gains rates.