In a time when everything from media to education is shifting to digital platforms, it makes sense that digital currency is headlining daily news. You’ve probably seen stories about bitcoin, the most popular cryptocurrency, exponentially shooting up in value, making its earliest investors rich in the process. While it might seem easy to hop on the bitcoin bandwagon, and equally as easy to refute it as an imaginary world of pixel money, there is a middle ground that shows both promise and hazards for the future of cryptocurrency.
Bitcoin was developed with an almost utopian mindset, and aimed to be the first perfect currency. Throughout history, various currencies suffered from two major flaws – overproduction and centralization. Coins and paper money can be produced so quickly and unlimitedly that hyperinflation becomes a threat. In addition, having one entity control the currency (for US dollars this entity is the US government) can jeopardize the stability of the currency, and gives the controlling body a lot of power over its future.
Bitcoin seemed to beat these obstacles, as it is finite in quantity (there are 21 million potential bitcoins, 11 million of which have been acquired through “mining”) and is monitored by a vast network rather than a single agency.
While it is indeed a great idea, it has shown a lot of opposition from experts. Some are worried that it is too much of a commodity, as almost everyone currently buying it is simply hoping to resell it back. Unlike cash transactions, which can be used to buy almost anything, bitcoin transactions are fairly complex, and are rarely accepted for anything other than exchanging currencies. If cryptocurrency can one day be used to buy a cup of coffee and a tank of gas, it will be seen as more stable and legitimate.
While I am certainly no expert on the economy or the future of cryptocurrency, I strongly suggest anyone interested to do their respective research before investing their own personal money. Although there is definitely a chance to make some money with little effort, it is a gamble that is unpredictable due to the originality of it all. There are passionate economic experts on both sides, and only time will tell what will evolve from this innovative technology.