Technology Insights Podcast – Part 3
Bitcoin? Ethereum? Ripple? A global virtual currency designed to work as a medium of exchange? 20 years ago, this was unheard of and deemed almost impossible, and yet as of today 3 in 4 people use cryptocurrency, and around 2.9 to
5.8 million Americans alone have invested, with hopes of making them better off financially in the future.
Cryptocurrencies first emerged in 2009 when the world’s first decentralised currency, Bitcoin, was created. The core idea behind cryptocurrency was to create a secure and anonymous way to transfer currency from one person to another, and since then its value has skyrocketed and it’s been heralded as ‘digital gold ‘amongst its users.
Initially created by a Software Developer with the pseudonym Satoshi Nakamoto, to promote the anonymity of the currency, Satoshi Nakamoto had to develop something new, this is when Blockchain, the digital ledger of Bitcoin transactions, was created. Ripple, a real – time gross settlement system was introduced shortly after this. The currency itself is meant to enable the near instant and direct transfer of money between two parties. Any type of currency can be exchanged, from fiat currency to gold, to even airline miles. They claim to avoid the fees and wait times of traditional banking and even cryptocurrency transactions through exchanges. Its become so popular within the market that Banks are actually using this digital asset today worldwide.
Like most things in life, you bring out something new to the market and it’s not long before it’s copied, and this was the same for Bitcoin. In 2011, rival cryptocurrencies started to emerge into the market, with Litecoin, Namecoin and Swiftcoin to name a few all making their debut. This is not surprising considering the market value as of today for the Bitcoin currency is a whopping $44 billion. Because of this, there are new cryptocurrencies being created every single day by Software Developers worldwide, all hoping to become the next Bitcoin star.
While 2017 saw the biggest spikes in value across the thousands of live Cryptocurrencies, they are still not entering our day – to -day lives. Most individuals who own substantial amounts of Bitcoin are doing so as an investment, rather than looking to utilise the currency as a new way to purchase things online.
Shortly after the unprecedented boom in 2017, the beginning of 2018 saw a different story. The market crashed and fell by 65% leaving newcomers to the market unsettled as to whether it will ever pick up again.
With the future of Bitcoin looking volatile to say the least, here are some pros and cons to help you decide whether to invest into the world of cryptocurrency:
• Increasingly wide acceptance as a payment method – Hundreds of merchants now accept Bitcoin
• International transactions easier than regular currencies – Avoid transaction fees
• Anonymity and privacy relative to traditional currencies – separate Bitcoin accounts from public personas
• Exposure to Bitcoin-specific scams and fraud – Bitcoin has seen more than its fair share of medium-specific scams, fraud, and attacks, expect this to happen
• Black market activity may damage reputation and usefulness – An attractive market to criminals and the ‘dark web’ market participants
• Susceptible to high price volatility – Susceptible to wild price swings over short periods of time
So, how do things stack up? The first thing to note is that there are really no real-time electronic methods of payments in the current traditional financial system. So, if you’re looking for a payment method with no intermediaries, Bitcoin is for you. However, if you’re wanting a more stable route, with recorded transactions – stick to cash or your debit card.