The Craze of Cryptocurrencies

The Craze of Cryptocurrencies

The whole idea of crypto-currencies and the underlying blockchain technology that powers them is fascinating. There is no doubt that we are watching history being made around us. I could go on about the bonkers increase we are currently witnessing in the value of cryptocurrencies and whether we are in a “bubble”, but I won’t as nobody really knows and there are already thousands of articles making speculative stabs in the dark. Instead, I want to talk about the question “are crypto currencies here to stay?”

The most common counter argument I come across when talking to friends is “cryptocurrencies have no value because there is nothing physical or tangible.” This is a narrow minded argument and could be applied to almost any currency. If you were to try and buy a pasty in Newcastle with Kenyan shillings you would almost certainly be sent on your merry way to the nearest exchange to convert your shillings into a currency that the pasty shop will accept.  The same can be found with cryptocurrencies, not many shops will accept them but there are many exchanges where you can convert your Ethereum into USD or Bitcoin into Euros and this is where the value of cryptocurrencies lies. It is exchangeable, desirable and popular. It is so popular in fact that at the time of writing there is over $80 Billion in virtual currency out there. To put that into perspective as of 2017 the total value of all banknotes in circulation on the UK’s market was equal to approximately £73 billion or for comparison $95 Billion. Would you say the Great British pound has no economic influence?

I should point out that Government fiat currencies, like the U.S. dollar, have value because governments grant them legal tender status and only accept taxes through them. Cryptocurrencies do not have a central controlling entity like fiat currencies but that is one of the attractions, they are decentralised by nature. (There is the prominent issue of “whales” in the crypto markets but that is a discussion for another day.) I do admit the decentralised nature of the currencies and the fact they are not controlled does mean they are kept afloat by the users. Much like a social network without the users there is no network. This is a vulnerability of the tokens, if everybody stops using them, they would become worthless. However, I cannot see this happening. I believe they are here to stay and their popularity will only grow. With every day that passes it is becoming easier and easier to use cryptocurrencies in everyday life. Not many people are aware but there are actually physical bitcoin ATM’s and there are lots of them, not just in one place but all over the world. 1409 to be exact and there are more being installed every day. You can now get “light” internet browser wallets which allow you to hold and transfer your virtual funds. It will not be long until using cryptocurrencies are as easy to use as your current money of choice. With banking apps, contactless and ATMs it could even become easier to use as a currency that was literally forged in the digital world.

The bubble we are currently in will probably pop and the values of the various tokens will fall. I’m sure some will even die out. However, those that survive, and I assure you there will be survivors, will come back stronger than before to become an integral part of our society. Just look at the Enterprise Ethereum Alliance. The age of block chains and cryptocurrencies is on its way. What will be interesting to watch in the near future is how governments class them. Will they treat them as currencies and the community intends or as securities?

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