Cryptocurrency: To the Moon?
March 31, 2023
The public trading market has always been unpredictable and volatile with little rationality behind it and big dreams for growth. New innovations spark interest within the general public and cryptocurrency is no exception to this with its seemingly novel technique of being able to do transactions in a purely virtual fashion using digital forms of currency. Due to its nature, it could potentially eliminate banking systems in which all funds are directed to a central location and expelled from there as well. Crypto operates with a blockchain which is a system that records all the transactions digitally and is effectively unhackable and inalterable because it is shared across all users’ networks and will only update if all other networks reciprocate the same changes. Crypto itself is also an encrypted form of currency which makes it near impossible to duplicate or create counterfeits of and as a result, this system of finance is far more secure than many others that involve physical currencies. Inevitably, cryptocurrency has become both a great tool for the world in making finances easier and safer but has also produced the perfect method for those seeking elicit materials to make transactions with.
The benefits that have come with crypto have truly changed the financial world beginning with the story behind Bitcoin, the most popular cryptocurrency’s rise. When the pandemic hit the world, the US was under great pressure to be able to act as a safety net for the economy and those who were becoming unemployed as a result of the mass layoffs. With this came great fears of steep inflation rates, something which bitcoin and many other cryptocurrencies would not be subject to. It is this independence from the federal system that attracted many towards bitcoin as a much more reliable currency that did not incur any interference and was simply based on the investors. The fact that the cap of bitcoin is strictly 21 million tokens improves upon this aspect of countering inflation. Cryptocurrency’s benefits spread to more areas including its superiority to many other current methods of transferring and gaining money. It is both faster and cheaper to use as a transactional method than wire transfers and does not require a bank account. Simply a phone and some money is needed.
Unfortunately, cryptocurrency has delved deeply into the more nefarious areas of the digital world including purchases of illegal substances, money laundering, and tax evasion. Even though the blockchain is completely public and allows the global community to see all transactions that have ever occurred, the actual identities behind transactions are hidden by an alpha-numerical text which only those involved in an exchange of bitcoin will be able to know about. As a result, investigating such illegal activity is very difficult and can be almost impossible to decipher without more knowledge regarding the case. Finally, the largest hindrance of using cryptocurrency as opposed to normal financial means would be its price volatility. The US dollar has always been a staple of price reference due to its relatively stable value in comparison to foreign currencies. However, the price of many cryptocurrencies greatly fluctuates on a day-to-day basis and can go up by 20% within a month or crash by 50% over the span of a year, making the long term possession of them an unreliable option. Even with all the possible opportunities and values associated with cryptocurrencies, it is ultimately not a very sustainable financial option to invest in and should be revised in a way that would prohibit its use in illegal operations rather than further encouraging them.