What is the future of money? Today, more than ever, we are moving toward a world order that prioritizes digital means of demand and supply. Since the onset of the internet boom, retailers, advertisers, and other merchandisers have capitalized on the expansive opportunities within e-commerce to bolster sales. This year alone global earnings of retail e-commerce are projected to net 27 trillion dollars. As I continue to strive towards conscious consumerism in the digital age, I find it imperative to understand trends and developments in currency. This led me to explore the seemingly nebulous world of cryptocurrency.
Cryptocurrency is an internet-based form of payment that uses cryptographical technology to conduct financial transactions. Cryptocurrencies leverage blockchain technology that decentralizes information across various servers to manage and record transactions. There are over 2,000 types of cryptocurrencies traded publicly, the most popular being Bitcoin. Many cryptocurrency supporters prefer this method of currency because its decentralized processing system strengthens security and cuts out banks and other financial institutions as middlemen.
Cryptocurrencies allow the encrypted, global exchange of currency without exchange rates, wire fees, or third-party verification. Cryptocurrency is viewed by many as the currency of the future, and supporters are buying them now before they presumably increase in value. You can buy some cryptocurrencies with US dollars; however, others require that you trade other types of cryptocurrencies to acquire.
The first successful decentralized cryptocurrency, Bitcoin, was created in 2009 by an anonymous developer who went by the pseudonym Satoshi Nakamato. Nakamato was able to utilize SHA-256, a cryptographic hash function, to make the first Bitcoin transaction that became a model for how other cryptocurrencies were designed. In 2011, 1 bitcoin was worth 1 US dollar. In 2017 1 bitcoin was worth more than 20,000 USD, and today 1 bitcoin is averaging about 7,000 USD.
Some don’t believe that cryptocurrencies are a valuable investment. In order for cryptocurrencies, such as Bitcoin, to become serious contenders as alternatives for transmission of money, they need stability. Without consistent standards of value, merchants and consumers cannot define what is a fair price for goods exchanged. In many ways, the price volatility for cryptocurrencies makes them an unreliable investment.
The emergence and popularization of cryptocurrencies—especially in the contemporary context of a global pandemic—forces us to re-evaluate our relationship with currency. In the battle against coronavirus, many charities and foundations are looking towards and accepting cryptocurrencies as a form of payment because it reduces transaction costs and protects private donor information. Additionally, as the US dollar and other international currencies experience drastic inflation in the face of fiscal and monetary stimulus, widespread unemployment, and drop-off in economic demand, analysts are carefully looking to cryptocurrencies as a possible safeguard.
Undoubtedly our global pandemic will have far-reaching impacts that ultimately change distributions of power, privilege, and wealth across economic and social classes. With this in mind, could the decentralized nature of cryptocurrencies make them a more accessible, egalitarian, and sustainable form of money?
Our current capitalist system, which is built on a history of slavery and uplifts a mentality of greed and hyper-accumulation, is crumbling before our eyes and illuminating the dire need for alternative means of trade and exchange. As our unpredictable, collective future unfolds, I am eager to incorporate practical technologies that serve and support the masses.