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Have you heard your child mentioning ‘crypto’, ‘Dogecoin’ or noticed sudden interest in Elon Musk’s Twitter feed? The number of teens entering the world of cryptocurrency trading is on the rise. Here’s what parents should know about teens trading crypto.
Written by Cyber Expert:
Teachers and school wellbeing staff are raising concerns regarding the growing trend of teenagers entering into the world of cryptocurrency trading. Here's what parents need to know about how it works and what's driving this trend amongst teens.
Cryptocurrency is a virtual currency that is encrypted, untraceable, and decentralized (can be transferred globally from one person to another without the involvement of an intermediary, such as a bank). You may have heard about some of the more mainstream cryptocurrencies in circulation, such as Bitcoin and Ethereum; however, since the conception of this technology over a decade ago, the number of cryptocurrencies has continued to grow. Unlike a country's government-approved dollars (fiat) that we use for day-to-day transactions, a particular 'crypto' value is driven by an open free market (trader supply and demand).
When it comes to routine purchases for everyday life (fuel, groceries, bills), there's not a lot that can be bought using cryptocurrency at the moment, and although some US fast food companies, Xbox, and even Paypal have begun dipping their toe into the world of accepting crypto for payment, it remains far from a common method.
Cryptocurrency is more widely used for purchases between individuals, particularly when those individuals would rather the transactions remain untraceable. For this reason, funds transferred in Bitcoin or other cryptos tend to be the preferred method of payment for scammers and people buying and selling goods or services on the dark web.
The buying and selling of cryptocurrency is regarded by most as similar to stock trading. It is done with the intention of financial gain and is the main objective driving the trading behavior of many teen participants.
Like many things that drive teen behavior, cryptocurrency trading is becoming a trend. Traditionally, potentially undesirable trends have been a little easier to contain as they percolate through direct contact with peer groups. However, the evolution of social media, influencers, and global online communities has supercharged this process. Teenagers are presented with TikTok videos of people showing off their lavish lifestyles or enormous financial earnings attributed to cryptocurrency trading. The social media influencers teens follow may preach the value of a specific crypto they’ve purchased, promising financial gain to those who do the same. The gamers they watch stream may even mention or facilitate crypto chat amongst their community.
These may be the actions that bring general awareness to the activity of cryptocurrency trading; however, easily accessible online communities supplement this on social media, Discord, and Reddit (amongst others), where teens can learn about how to trade as well as discuss trading tips.
The value of cryptocurrency is incredibly volatile. Even the most established crypto (Bitcoin) is prone to drastic and rapid spikes and troughs. In April 2021, a single Bitcoin was worth approximately $65,000 (USD), but the value had nearly halved by May. What's more concerning is that people with influence and coordinated online communities can single-handedly drive or crumble the price of cryptos. There is arguably no better example than looking at the value of both Bitcoin and Dogecoin (another cryptocurrency) in conjunction with Elon Musk’s Twitter feed. A single Tweet from Musk can significantly impact the value of any currency at which he takes aim.
In addition to volatility, there's also a steady stream of scam cryptos that are periodically introduced. These cryptos are hyped up by online personas and eventually disintegrated, leaving those who have purchased them out of pocket with no central authority (such as a bank) to help them recoup their loss.
For teenagers partaking in cryptocurrency trading, there is the obvious and immediate danger of financial loss, but on the flip side, the potential for significant gain. There is currently no research to explain how this activity may influence future behavior and attitudes towards money and risk regarding longer-term impacts; however, one particular concern is the similarity between cryptocurrency trading and gambling.
Discord is a free communications app initially created by online gamers as a platform for other gamers to chat together while playing.
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