The Future of Cryptocurrency
Disclaimer: This article is not financial advice, but is rather meant to discuss the future and system of cryptocurrency.
Cryptocurrency is a unique type of currency that uses digital files as money. The technology for crypto was first developed and utilized in 2009 by Satoshi Nakamato, a person or group of people that founded the first crypto currency, Bitcoin. In its 12 years of existence, Bitcoin has grown exponentially from a price of around 8 cents to a range of $50-60k as of December 2021.
But how exactly does Bitcoin work?
The technology behind cryptocurrencies may be confusing for most people, but crypto uses something called “blockchain.” In a nutshell, blockchain is a digital ledger or database, that is distributed across a network of computers. There is no single computer that controls the database. Instead, it is a decentralized network of computers that keeps the blockchain running while also authenticating transactions.
So why do people invest in this technology? We asked Juan Lopez-Leanos, a senior at Riley High School who is actively investing in crypto, to explain why interest in crypto is growing. In his words, “The main point of crypto, like how it works, doesn’t matter- it’s how we use it. It’s meant to shorten the time between payments.” The biggest appeal of crypto is the high authenticity and short transaction time between payments. Additionally, the usage of blockchain makes it much harder to trace transactions making it popular for people like … hackers.
To invest in crypto, you have to be at least 18 years old. There are plenty of apps and websites used to buy coins, with Coinbase being the most popular. Of course, there is a large amount of verification required to start investing—you will need an ID, a Social Security number, and a photo of yourself for authentication.
After you create your account on your chosen software, there are a plethora of coins to choose to invest in. From Bitcoin to Ethereum to even Dogecoin, it may be overwhelming looking into what exactly to put your money into. Cryptocurrencies are similar to stocks and can be just as unstable. The biggest thing to realize is that only a few cryptocurrencies are stable, good choices. The coins other than Bitcoin, called “altcoins,” may not be as stable of an investment.
An example of what a Bitcoin mining rig looks like.
So how has the world adapted to Bitcoin?
There have been both positive and adverse reactions to the growth of crypto. The small country of El Salvador, for example, gave Bitcoin the status of legal tender. The large country of China, on the other hand, has shown that it does not appreciate crypto. In fact, they recently banned all cryptocurrency transactions and are hunting down on crypto mining.
Crypto mining is the way that new coins are added to circulation—similar to how dollar bills are printed. This process requires an intense amount of energy which is one of the biggest drawbacks of cryptocurrency. The cost of energy and computers required to make a profit on Bitcoin may not be worth it. Additionally, the profound use of energy also leaves an impact on the environment.
The future of cryptocurrencies like Bitcoin does like promising. But until more countries accept Bitcoin as payment, it may take time for crypto to be fully useful.