Cryptocurrency refers to digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently from a central bank. This means that there is no central bank backing the currency. Which also means that it does not have the intrinsic value that traditional currency or a commodity such as gold has. This is scary to many people and makes digital currency an uncertain and risky form of currency. Despite the risks of cryptocurrencies such as Bitcoin and Ethereum, they have been seeing a lot of growth and success over the past couple of years, as they become more accepted forms of currency. Bitcoin is by far the largest cryptocurrency in terms of total market capitalization. The current price of a single Bitcoin is approximately $700 USD. This is extremely high when you consider that in 2015 you could purchase a Bitcoin for $200 USD and in 2012 you could purchase a Bitcoin for just $5 USD. Now with a market capitalization of over $11 billion USD you could say Bitcoin is picking up steam.
Currently Bitcoin users are generally younger tech savvy individuals. This is in large part due to the complexity that comes with owning and using Bitcoin. As Bitcoin continues to grow it is becoming easier to use. With more individuals seeing the opportunity in Bitcoin more and more applications that assist with ease of use of being created. We can see this with number of cryptocurrency wallets being created. There are also many options for the storage of Bitcoin including online wallets, software wallets, hardware wallets, paper wallets. All of these wallets have a specific use that they are best for, online wallets are best for owners that make payments often and need quick access to their Bitcoin, whereas hardware wallets are much more secure and are better for storing large quantities of Bitcoin in a very secure manner. As you can see this is all still very complex and scares away a lot of possible Bitcoin users. In my opinion, I see Bitcoin and other cryptocurrencies remaining a fringe form of currency just due to the complex nature of the currency. That being said, I believe that Bitcoin will continue to grow and will increase significantly in value as more young tech savvy individuals continue to adopt the currency.
The possible applications of cryptocurrencies in global finance are endless. Currently we are seeing incredible amounts of FinTech start-ups being created, around the many applications of digital currency. Many large banks are also beginning to see the applications of digital currency and some bankers are projecting Bitcoin to increase to anywhere from $2,000-$10,000 USD. What makes digital currency special is that is directly trade-able between two parties without the need for a trusted third party. This is what makes the currency so easily trade-able on a global scale. With business becoming more and more globalized everyday the demand for a currency that is easily exchangeable on a global level is rising.