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.