Ah, cryptocurrency, or crypto for short! The media does so love that word. Crypto this, crypto that, crypto is life! Crypto, that thing that’ll magically solve anything and everything. Or that weird thing that only nerds use, depending on who you are.
But what the heck is crypto anyway? Should you be excited? And the big one: will it magically solve everything?
What even is it, anyway?
Cryptocurrency is, according to Merriam-webster:
any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions
Cryptocurrency is essential a decentralized currency, which is why it’s popular amongst privacy considerate users. And criminals, of course.
You may have heard of it in the context of mining. Mining crypto, much like mining in real life, is a hard task and only valuable as long as it’s hard to get. This means that in order to remain valuable, cryptocurrency has to get harder to mine as more use it.
The wild west of cryptocurrency
Cryptocurrency was once so popular because it had no regulations, but this simultaneously meant that it fluctuated a lot in value. Bitcoin, for instance, has went from $0.03 in 2008 to $12,637 in 2019 (source: Bitcoin wiki ). It also has dropped to under $1k in recent months, then back up to well over $10k a coin. That’s quite the change!
Cryptocurrency, in it’s purest, unregulated form, is not altogether stable (at least the popular ones aren’t), and governments are now starting to take notice. The IRS now requires you to declare, and pay taxes on, any profits you make off of any virtual currencies (source: CNBC). The EU has said it’ll introduce legislation by 2024 (source: Reuters).
The wild west feeling is fading, for sure.
Curiousity killed the cat
At first, cryptocurrencies like bitcoin were this shiny new thing. Then once it gained a little traction, suddenly the value boomed. And now every nerd and her friend has a miner mining it.
But now, this popularity has eaten bitcoin alive: it’s getting less and less profitable to mine as it gets more and more difficult to mine and requires more hardware power to mine.
Cryptocurrency is by no means dead, but it’s getting less and less attractive to the average user.
What’s in the future of cryptocurrency?
But you know who is taking an interest now? Banks and businesses. Cryptocurrency is sure a good way to keep track of inventories, and to do all the money transfers behind the scenes. There’s hospitals using it to track doses of the COVID-19 vaccine, there’s banks using it to secure a few transactions.
I foresee a future in which mining isn’t popular anymore, but that businesses and banks largely use crypto in one form or another. I don’t think it was ever designed to be what it is now, but to be where it’s going: not a personal product or for personal usage, but more for enterprise and financial institution usage.
What do you think? Let me know in the comments or go back to the homepage.