Cryptocurrency: Moving Forward Without Moving

(Essay written in Winter 2019)

It is amazing to see how the world economy changed since its beginnings. Historically, early civilizations had to barter goods to get the goods and services they wanted, quid pro quo. Now we have our bank accounts, credit reports, stock portfolio, etc. directly on our phones and are able to handle our household finances from the comfort of our homes. In light of these technological advancements, we recently faced a new and advanced form of currency that could potentially be used internationally. Cryptocurrencies are digital assets that struck the eye of millions of investors who saw their potential and many advocate that it is the new era of currency. Why is it not the new and improved way we use currency then? It is not very useful, on the grounds that it is not yet convenient for people to use for day-to-day transactions due to delay when making transfers and commission fees of the blockchain. In this essay, we will further analyze its usefulness as well as weighing the benefits and the drawbacks of cryptocurrencies, all in the hope to address the concerns many face regarding this new currency.

First and foremost, what really is a cryptocurrency? Per Merriam Webster’s definition, a cryptocurrency is a digital currency delivered by an open system, instead of any government, which uses cryptography to ensure payments are sent and received securely. Indeed, the people are in charge of the people, this swing of events would ensure that the privacy of the people remains protected, which is a fundamental goal in a free society. Transactions through the use of cryptocurrencies are anonymous but can be distinguished by digital codes and maybe traded globally. How is this all possible? Well, when a transaction is made, it then gets posted on millions of computers around the world, then every 10 minutes blocks get created and recorded all the transactions made in the last 10 minutes. Who does it? cryptocurrency miners, are in charge of recording every transaction made from the blockchain, and often times get rewarded with cryptocurrencies for their restless work. The beauty of this blockchain is that everyone is interdependent on every one to assure the security of their investments. In like manner, it brings cooperation between people and makes everyone a valued member of such community.

On the other hand, some stock brokers and investors do not share this sentiment of possible profitable outcome about cryptocurrency resulting from the fear of counterfeit. Stephen Gordon mentioned in the national post that considering that cryptocurrencies are digital files their reproduction are fairly trivial (Gordon, 2018). In a world where everyone is a master of encryption maybe, but to do so would not be so easy. In order to “Double-spend” for example, sending the same 100$ to 2 recipients, firstly is highly illegal, secondly to do so is not an easy process; according to Don Tapscott investor, stock broker, and CEO explained on a TEDtalk conference, you would need to hack that block and all preceding blocks, the entire history of that blockchain, not just on one computer but across millions of computers simultaneously, all using the highest level of encryptions in the light of the most powerful computing resource in the world that is watching (Tapscott, 2016). Thus, making the reproduction of such codes not possible to the average person.

In addition, Stephen Gordon covers how they are not a stable store of value and that people should avoid investing at their current price levels in light of their high volatility. On such matter Shark Tank investor Kevin O’Leary seems to share Gordon’s stance on cryptocurrencies, from a CNBC interview O’Leary referred to Bitcoins (BTC) as “garbage” and “digital game”, on the grounds that for a currency to be considered as such, it must remain stable for it to hold value. Volatility in cryptocurrency is in fact plentiful, although many have benefitted immensely from such volatility (O’Leary, 2019). OZ Pearlman former Merrill Lynch employee and award-winning entertainer called out O’Leary on his allegations concerning volatility of Bitcoins when he said on a CNBC phone interview “you go for the safe approach but I’m swinging for the fences here!”. Furthermore, Pearlman made a compelling point when stating that the odds of a fortune 500 company striking a 100% increase in a year is slim to none (Pearlman, 2019). When Bitcoin (BTC) emerged their price level per coindesk, was as low as $13.39 USD in January 2013. Since then, the following year BTC encountered a 5956% increase with the price level being at $797.51 USD in January 2014, which is insignificant compared to its all-time high of $20K in 2017 constituting a 149,265.27% change which surprised many. (see chart 1).


Bitcoin History price since 2014 –

Moreover, data expressed in (chart 1) only covers the exponential growth of BTC but is it a reality for other cryptocurrencies? Yes. Many cryptocurrencies have had significant increases in the little time they emerged in such as; Ripple (XRP), Ethereum (ETH), and Litecoin (LTC) to name a few are amongst the most successful cryptocurrencies in use today and whipping their fortune 500 company counterparts’ derriere when comparing their price level changes within the same time frame.

In conclusion, cryptocurrencies are still fairly recent and still needing improvements in accessibility because they are not very user-friendly consequentially reducing their market cap. If more people started investing in cryptocurrencies we would be able to expand the global economy and redistribute wealth among struggling countries in the process. We acknowledge the risks coming from cryptocurrency but we won’t acknowledge that they are useless. Bitcoins are one of the most performing assets to own right now and even if they are not accepted as a means of exchange everywhere their monetary value is still solemn. For the time being, cryptocurrencies should be viewed as an investment rather than an international currency until they become more stable and become accepted as payments globally.

******* NOT FINANCIAL ADVICE *******


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