"Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative." - Nassim Taleb
"So my view's quite clear. I believe cryptocurrencies; Bitcoin is the first example, I believe they're going to change the world." - Richard Brown
So, what IS the future of Digital currencies?
Worth over $400 billion U.S. dollars in today's market, digital currencies represent a tiny portion of the world's economy. The U.S. portion, representing nearly a third of the entire world market capital in digital currencies, is capped at roughly $25 trillion.
"Virtual Currencies may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system." - Ben Bernanke
Where does it stand now? There are more than 1,000 cryptocurrencies in the market. It is well-known that these alternative digital currencies are continuously generating a lot of buzz in the media. It's no wonder investors and prospective investors are more than a little curious about digital currencies' potential.
It's true that digital currencies such as Bitcoin have caused such a financial frenzy lately. Bitcoin is featured heavily in the news, partly due to its massive increase in value, and partially because China is taking steps to ban it. So, will all this spotlight increase its popularity, or cause it to fade away into obscurity like any other fad? What does the future hold for digital currencies, generally, and for Bitcoin specifically?
"It's money 2.0, a huge, huge, huge deal." - Chamath Palihapitiya
"The future of money is digital currency." - Bill Gates
What Is Digital Currency?
Digital currency, (sometimes called electronic currency, digital money, or electronic money), is money that is not physical, like banknotes or coins, yet they can exhibit the same qualities. It can be spent on goods or services, can be invested and traded.
Digital currency is not backed up by gold or precious metals. It is entirely digital. It is not controlled or regulated by any government. Digital currency is altogether controlled by public domain. All this means that its success or failure, its value is entirely off limits from any centralized authority.
These qualities make digital currency very desirable for people wanting to buy or invest without a bank or government agency looking over their shoulders. They can make all the transactions they need entirely confidential. Conversely, there's no safety net, either.
Have you seen all the fuss about cryptocurrencies? Have you been following the news about Bitcoin? How about the following quotes, have you heard these?
"Stay away from it. It's a mirage, basically" - Warren Buffet
Creators of digital currencies aren't subject to the rules of financial institutions, which means, they make their own rules. Since there's no government overseeing valuations, digital currencies are extremely volatile to fluctuate. Money laundering is a constant threat, particularly, overseas.
Simply put, digital currencies are mainly dressed up databases. Bitcoin, for example, is a database listing who owns what bitcoin, and the history of all transactions made between its owners.
Apparently, there's quite an incentive to get into digital currencies. The value of just one bitcoin has gone from a few dollars eight years ago, up to $1200 almost a year ago, to a high of $20,000 in December, and to about $11,000 now. If you're lucky to have purchased a few bitcoins early on, you're very wealthy, on paper, at least.
"Bitcoin is evil." - Paul Krugman
The truth is, even after the recent financial market's roller-coaster global crises, the increasing public distrust of banks and governments, etc., people still love the concept of a currency that is controlled by no one. The sentiment, "Power to the people" is still very much alive.
In spite of the risks of economic collapses, currencies devaluing, and banks tightening their regulations, the concept of cryptocurrencies are indeed prevalent are one that is not likely to go away any time soon. Giving people the freedom to make their determination. That's our perspective, anyway. We believe the popularity of digital currency will continue to flourish. Caution, however, must be exercised and risks should be taken with expendable resources.