What are Cryptocurrencies and why Should you Care?
In its brief lifetime, cryptocurrency has been described as many different things. From being derided as a 21st century unicorn to being celebrated as the money of the future, the concept of digital currency has definitely experienced peaks and troughs since its inception a decade ago.
Much of this to do with Bitcoin, of course, which has long-since established itself as a poster boy for cryptocurrency in the digital age. Make no mistake; Bitcoin has showcased both the true potential of digital currency and its numerous flaws since 2007, while it has also blazed a trail for similar innovations to make their mark in the financial and consumer markets.
With so many conflicting opinions influencing the perception of cryptocurrency, however, it’s important to understand its true nature and its potential impact on the world as we know it. We’ll explore this in further detail below, while also debunking some of the myths surrounding digital currencies.
What are Cryptocurrencies?
In short, virtual or cryptocurrencies are digital assets that work as mediums of exchange within a transparent, online network. They work entirely differently to more traditional types of currency, primarily because they’re underpinned by a decentralised structure that has no central point of control or failure. This allows for transparent and real-time transactions, while it also creates global currencies that can be accessed universally without being subjected to transfer fees or hefty interest rates.
The decentralised nature of cryptocurrencies such as Bitcoin underlines their core appeal in a strained economic climate, where the perception remains that central banks and national governments claim too great a share of citizens’ hard-earned money (particularly through tax levies and interest rates). In this respect, cryptocurrency represents a significant game-changer in the interconnected worlds of finance and consumerism, as it does not come under the control of a central bank or international authority.
How are Cryptocurrencies Evolving and how can you Get Involved?
Since the initial days of Bitcoin, the world of cryptocurrency has benefitted enormously from improved regulatory measures. Similarly, regulators have also placed caps on transaction limits within the industry, transforming the digital currency space from a relatively lawless entity into one that was well-policed and exceptionally secure.
This has enabled innovators to identify key applications for cryptocurrencies, while also opening up the marketplace for investors to buy and sell assets. In fact, Bitcoin has emerged as a genuinely appealing asset class for financial market traders during the last two years or so, with the market’s capitalisation having peaked at $96.7 billion during October last year.
As a result of this, Bitcoin now has a larger market cap than either Goldman Sachs and Morgan Stanley, and this is only likely to increase in the years ahead.
More recently, we’ve also seen the rise of Initial Coin Offerings (ICOs), which represent an unregulated means by which funds can be invested and raised for new cryptocurrency ventures. ICOs are increasingly popular among tech start-ups and burgeoning firms, who can leverage these to bypass the rigorous fund-raising process usually required by banks or venture capitalists. This process involves selling a percentage of the cryptocurrency to early backers in exchange for legal tender, which in most instances is Bitcoin.
Given the growing value of Bitcoin as a financial asset, this is now accepted as a great way to invest in the currency while also diversifying an existing cryptocurrency portfolio.
Bitcoin has also found a natural application in the online casino market, with a host of operators now allowing customers to place wagers using cryptocurrency. Similarly, the cryptocurrency Ethereum has also emerged on the back of sustained blockchain innovation, with innovators proposing to utilise this as a way of introducing zero-house edge casino to gamblers.
This would leverage a decentralised autonomous approach to regulate the gaming experience, while eliminating the traditional house edge and delivering totally transparent gameplay.
The Last Word
There’s no doubt that cryptocurrency is now successfully exploring potential applications in the marketplace, while it’s certainly impacting on the financial marketplace and changing the way in which people gamble.
With currencies like Bitcoin now fully realising their potential, it’s also clear that far being a 21st century unicorn, cryptocurrency is a ground-breaking innovation that could ultimately alter our perception of money.
