Cryptocurrency, oftentimes called ‘Crypto’ is any form of currency that exists digitally or virtually. It uses cryptography to secure transitions due to which only the sender and the intended recipient can access the contents. Crypto is derived from the Greek word ‘Kryptos’ which means hidden. As of 2021, it is estimated that over 300 million people use crypto worldwide. In aggregate, cryptocurrency holds a staggering $1.65 trillion market cap which constantly fluctuates on a daily basis. Bitcoin and Ethereum are the two cryptocurrencies that accumulate the highest market cap with $827 billion and $402 billion respectively.
As of recent, crypto has been earning a bad rap due to many influential bankers, businessmen, and government officials calling it a ‘far fetched idea’ and that the only true economy is based on either dollar or gold reserves. The owner of JP Morgan, one of the largest banks in the world, Jamie Dimon stated, ‘Bitcoin is worthless.’ Warren Buffet himself is also a strong disbeliever of crypto. Back in 2018, Buffett described Bitcoin as “probably rat poison squared.” Many believe that crypto is a speculative asset that doesn’t produce anything and has no inherent value. He sees it as similar to the tulip mania that took hold in The Netherlands in the 1600s, with people buying something in the hope they could sell it for even more than they’d paid. “When you buy non-productive assets, all you’re counting on is whether the next person is going to pay you more because they’re even more excited about another next person coming along,” he said on CNBC TV. “But the asset itself is creating nothing.” Adding to the list of businessmen, Peter Schiff, the owner of Euro Pacific Capital, a firm believer of commodities sees crypto as valueless as well, unless it is backed by gold. One may argue that these claims are justified. After all, crypto has no base currency reserve or supervising authority due to which fluctuation is common. Over the past 6 weeks, it devaluated by over 50%, making even fanatical crypto miners rethink their investment.
Based on what you have read above, you may have concluded that cryptocurrency is not worth it. You may be right, but nevertheless, it is crucial to see things from another perspective. There are countless benefits of cryptocurrency, namely easy transactions. Crypto transactions can be made easily, at low cost, and in a manner more private than most other transactions. Using a simple smartphone app, hardware wallet, or exchange wallet, anyone can send and receive a variety of cryptocurrencies. Some types of cryptocurrencies, including Bitcoin, Litecoin, and Ethereum, can be bought with cash at a Bitcoin ATM. A bank account isn’t always required to use crypto. Someone could buy bitcoin at an ATM using cash and then send those coins to their phone. For people who lack access to the traditional financial system, this may be one of the biggest pros of cryptocurrency. Another major selling point for crypto is its Incredible Security. Because they are based on cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment.
This might be one of the most definite benefits of cryptocurrency. Crypto played a major part in industry building and is perhaps one of the best-performing assets of the last decade. Its market cap grew from a mere $1.6 billion in 2013 to $1.4 Trillion in June 2021. On a more personal scale, most cryptocurrencies offer close to astronomical returns. Bitcoin, for example, was virtually valueless when it started (2009) and has kept a steady return rate of millions of percentage points per year. By comparison, the S&P 500 index of stocks returns an average of about 8% per year.
All in all, it must be noted that crypto is still a relatively untested and misunderstood economic sector and it will take a further 10-20 years for it to establish its credibility. In my opinion, a crypto is a form of financial transaction that will and should be used in the future. Its benefits outweigh the threats it poses and if used responsibly, it can truly be advantageous.
