Cryptocurrencies more than a decade in are worth trillions of dollars, more than the GDP of Italy.
And to many crypto is the feature of money. But unlike the now of money, the money that’s in your pocket, good luck trying to find a place to buy a cup of coffee with it.
Depending on who you ask cryptocurrency is the biggest transformation of money since the invention of paper or the biggest scams. So let’s talk about how it works.
We know there are many different kinds of crypto there’s Bitcoin, the most famous and the most valuable of all cryptos. Then you have all coins like doge coin. There are thousands of these smaller cryptos whose value fluctuates wildly as new ones are being minted every day. And then there’s Ethereum, which has enabled the rise of NFTs, digital art and collectibles that are traded on the blockchain.
So you might not be able to buy a cup of coffee with crypto, but you can buy an NFT of one.
And what binds the majority of all of them together is the blockchain. A decentralized network of computers which verifies transactions. But another thing that binds cryptocurrencies right now is that they aren’t actually that useful. Transaction times are slow for Bitcoin. It could take up to 20 minutes for a single transaction to go through. On top of that, you’ll be paying expensive fees. So if cryptocurrencies aren’t actually that useful as a currency, then why are they so valuable?
Cryptocurrencies are backed by nothing but the underlying technology and people’s belief in it.
Belief in it, many people believe cryptocurrency is going to get them rich. Others believe in what you can call a techno libertarianism, putting their faith in these decentralized networks over a central bank or a corporation
Cryptocurrency is designed to empower the individual with the idea that they are the bank and they are the governance of this cryptocurrency. These cryptocurrencies are supposed to be written by the people and to belong to the people.
But critics say all this talk about expanding access to sending money is just that, talk. Since we already have all of these efficient ways to buy a cup of coffee, why add another?
There are no practical users of, uh, cryptocurrencies, 99% of transactions that does using one crypto to buy another one. Not by goods, not by services. It’s just a self fulfilling referential bubble with no link to anything in the real world.
Another concern, the network’s powering cryptocurrencies are using energy. A lot of it.
Take that coffee NFT from before.
One NFT on average uses as much energy as driving around 500 miles in a car. And yet billions of dollars of investments are still pouring in.
Governments themselves are looking to launch their own digital currencies to compete with crypto while at the same time writing legislation to regulate them.
So now with highly volatile cryptocurrencies entering the mainstream, there are still more questions than answers.
Is it the future of money or is it just a bubble? Is it beholden to the hands of government or could it be shackled by regulators and will we ever be paying for that cup of coffee in.