Last updated on 12 September 2021
When you mention Cryptocurrency to most people they immediately think about Bitcoin. Many people have not heard of it and those that have know next to nothing about it.
Firstly I need to explain that there are many form of Cryptocurrency Bit coin being only one but it is the most famous. The word Bit comes from the term Binary Digit which is the essence of digital computing. A switch is either on or off and the on is represented by the number 1 and the off is represented by the number 0.
How did crypto currency come into existence. A mysterious person, people or organisation called Satoshi Nakamoto created a white paper with an algorithm ( set of instructions ) to create this purely digital currency that was limited in supply and therefore created scarcity value. The Bitcoin, his invention is mined by using computers. This mining process involves setting up mathematical problems which computers compete to solve. When solved by a particular computer it will record its mining of bit coin on a decentralised open ledger known as the Blockchain.
The blockchain allows transactions to occur without the the use of an intermediary such as a bank and is transparent for all to see. Since the creation of Bitcoin many others have joined the coin mining world. The most famous of these is Etherium which is more flexible than bitcoin as the blockchain transactions are able to be used is a broader way such as contract law.
I like to think of Bitcoin as digital gold a store of value as much as a means of transacting goods and services. Etherium and other crypto currencies are more like silver. Silver has an industrial use as much as a store of value of the precious metal. Many other digital coins will come and go all with their benefits and limitations.
How then could Cryptocurrency benefit or ruin the economy? Probably the biggest benefit would be to the developing world by reprogramming the global debt away from traditional lending organisations to a decentralised micro entrepreneurial capitalism. People are infinitely resourceful and will make a success if only given half a chance.
One big disadvantage is the uninsurability of the currency. If someone steals your wallet ( a secret password into your account) you have lost everything unlike the credit card system where you can claim against fraud.
I feel that the major causes of the growth of Cryptocurrency is the increasing instability of Fiat currency ( currency backed by central banks and governments ) the sub prime meltdown of 2008 and the Covid 19 Virus which has shaken the foundations of the present system.
In summery I feel that Crypto currency is here to stay, will slowly be regulated and become a means of sale and purchase across the globe. The only way it will completely disappear is if the world switched off the internet or solar activity destroys all wireless communications which is extremely unlikely to happen.