Cryptocurrency: An Investment Fad?
Young people are quickly moving to a cashless society. Bank apps, Venmo, Apple Pay, and other digital products mean that trips to the ATM to withdraw paper money are increasingly rare. Despite these changes, money has remained basically the same in countries around the globe. Paper bills and coins represent amounts that governments guarantee. Recently, however, a new type of digital currency has emerged that is beginning to have a lot of impacts.
Back in 2009, the first-ever cryptocurrency was developed by one, or multiple people using the pseudonym Satoshi Nakamoto. Unlike the physical money that we grew up with, cryptocurrency is a digital medium that has ushered in a tremendous trend in government spending, public spending, investing, and even pop culture. What exactly is cryptocurrency? Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.The most popular and well-known cryptocurrency is known as Bitcoin. Bitcoin developed as a currency that would be untraceable and easy to exchange without an intermediary. Due to its encryption, which is information that has been turned into code to prevent hackers and extremely low-key means for exchanging large and small sums of money, it quickly became a popular way to pay for things on black market websites. What is it exactly? Bitcoin, which is very similar to most other cryptocurrencies, is a digital currency where encryptions are used to make the generation of currency and the transferring of currency safe while trading online. It also functions outside of any national currency or any bank, making it as anonymous as possible.
In addition to its value for practical purposes, Bitcoin has gained recognition from numerous pop culture references. One of the better-known references to a cryptocurrency “jackpot” was in the movie Dope. The protagonist, a geeky high school student, finds himself in a sticky situation and references to Bitcoin become an underlying theme of the plot line. Bitcoin is also the subject of countless internet memes. These memes depict people who are obsessed with Bitcoin and show them bragging about their brilliant investment[MJR7].
The biggest cryptocurrency in the world made millions of dollars for early investors who took a risky bet and were enriched with newfound fortunes. Unfortunately, the wild ride to riches has been fading. Since its peak price of $19,205.11 for one bitcoin, a high reached on December 17, 2017, at 7 P.M, the price of the currency has been in a steady decline, going all the way down to under $10,000. The big winners were investors who bought and sold their stakes before the slide and those still holding their bitcoins have to evaluate their position on whether to leave their money in the Bitcoin market.
My opinion on Bitcoin is that it is a great idea. It was a revolutionary development and new and interesting cryptocurrencies will continue to emerge now that investors understand the potential for making money. However, I believe that Bitcoin will not surge as high as it did last year. Investors and crypto watchers may disagree with me on this, but I think there is still a lot of appetite for innovation in the financial markets. In 2009, Bitcoin was a brand new idea that inspired other cryptocurrencies like Ethereum and Ripple. There is no denying that Bitcoin was huge, and if you were savvy enough to buy into it early as well as sell at the right time, you could have walked away with a small fortune. Like many “easy money” ideas, bitcoin may have had its moment. In 2008, the real estate bubble burst after easy housing loans drove up demand and many people ended up with mortgages that were higher than the actual value of the houses. Banks gave mortgages to buyers whose salaries were not substantial enough to afford them. Soon, the government started cracking down on loans that banks would give out with free will. Eventually, as the housing market went down and it caused the whole economy to crash. Banks went broke, people became homeless, and neighborhoods were ruined by deserted houses. Bitcoin, like easy money for mortgages, may be a mirage that is too good to be true.
More recently, the Security and Exchange Commision (SEC) started to regulate the exchange of cryptocurrencies. Online exchanges for different forms of digital currencies were being used by scammers to take money from their investors. These illegitimate exchanges would wait for investors to buy their form of cryptocurrency, then take the money that had been invested and keep it. The SEC responded to this by making it illegal for exchanges to run without proper registration from the SEC. This announcement, which rendered small scale, and unregistered exchanges obsolete, also affected larger currencies, like Bitcoin. After the SEC’s notice, Bitcoin dropped nine percent and dipped below $10,000, which is about half the price it was trading at back in December.
Now what? Is Bitcoin’s current fading out of the spotlight rendering all cryptocurrencies obsolete? Absolutely… not. I do believe that there is still money to be made in cryptocurrencies. There could still be a revolutionary, game-changing, and mind-blowing idea out there in the world of cryptocurrencies. Nonetheless, the memes have stopped, and the prices have started to decline. In my eyes, the crypto-craze is over.