Global Issue: Bitcoin and Cryptocurrency

Since the 90s, there have been a myriad of attempts at creating a viable cryptocurrency. Bitcoin has so far been the most successful iteration. They all failed for a variety of reasons. The idea of cryptocurrency as a legitimate digital cash system was thought to be impossible, until 2009 when someone (or a group of someones) under the alias Satoshi Nakamoto created Bitcoin. It was a completely decentralized network, no servers and no banks. The decentralized approach allowed for Bitcoin to be completely anonymous and off the records, because in other iterations of cryptocurrencies there had to be a third party, a central server, to keep records of the transactions and other information. However, Bitcoin got around this by doing its transactions using a Blockchain network, which requires that each participant participate in transaction regulation. Each person in the network (the “miners”) takes a transaction, marks it as legitimate, and then passes it along to the next. The network relies on the consensus of all miners for transactions and balances to be considered legitimate. The entire process involves a lot of strong cryptography, hence the name “cryptocurrency”. It has become a strong investment opportunity, with a single Bitcoin hovering in value around $10,000 currently despite crashing in value earlier this year. Bitcoin and other cryptocurrencies, are a high risk investment. Cryptocurrencies are growing in popularity and spreading, with new types cropping up all the time. Some say they are the future of currency, while others are more skeptical about their longevity.

Cold, hard facts: What is cryptocurrency? How does it work? https://cointelegraph.com/bitcoin-for-beginners/what-are-cryptocurrencies

• Cryptocurrency is a digital currency that uses encryption to regulate the creation of currency units and ensure that the transfer of funds is valid
• It operates outside of conventional banks as a sort of digital cash
• It is designed to be decentralized and anonymous
• In the past, merchants that accepted cryptocurrencies were few and far between
• However, many merchants now accept Bitcoin as valid payment
• Other digital currencies are not accepted as widely, yet
• Cryptocurrencies are high risk, high reward investments, with volatile market values
• The acceptance of cryptocurrencies is growing, with the US recognizing them as convertible virtual currency, just like cash, gold, or gift cards
• Cryptocurrencies offer a new and complex challenge for law enforcement and tax authorities

 

Some people say… Bitcoin and cryptocurrencies are the future! http://time.com/money/5178814/the-future-of-cryptocurrency/

Tl;dr: Cryptocurrencies will replace national currencies in the future, with roughly 25% of national currencies being replaced by 2030. It is a new asset that people are going to invest in, like real estate. The name is somewhat of a misnomer, as it is more similar to property like real estate than it is cash. It does have cycles, but that makes it no different than other investment types like real estate or stock options. Cryptocurrency will alter everything, changing commerce and banking drastically. Because of its decentralized nature, without the need for a bank or even a central server, the need for banks and oversight is cut out. The role of the government in regulation will be complicated, as the government and other authorities are still grappling with how to regulate and tax cryptocurrencies.

Others say… Cryptocurrency is not all it’s cracked up to be. Proceed with caution. https://www.ft.com/content/42822ebe-fc4a-11e7-9b32-d7d59aace167

Tl;dr: In late January, Bitcoin faced a large crash in value. Up from an all-time high in December, value plunged from $19,434 per coin to just $9,000. Bitcoin is not alone, as other cryptocurrencies have had similar troubles. The trouble with cryptocurrencies like Bitcoin is that they are speculative, and that cryptocurrencies like the ones we see today cannot replace money as governments will not allow that. Some countries have even banned cryptocurrencies, like South Korea. Cryptocurrencies are not like gold, they are not universally accepted as valuable. Gold has an intrinsic value and has a long history of being used as currency or something to hold value. Cryptocurrency does not. As governments continue to crack down on cryptocurrency, its value will plummet. Cryptocurrencies are fads, volatile investment risks that are not worth the hassle.

So, what do you think? Is cryptocurrency the future of currency? Or is it a fad that is destined to burn itself out?