When Bitcoin, the first cryptocurrency of any note, first hit the market in late 2008, its unknown inventor said he had developed a ‘Peer-to-Peer Electronic Cash System’. It was sometime later that the name cryptocurrency was attached to it.
Like with all currencies, cryptocurrencies have varying values in different parts of the world and were intended as a way of making payments easier. The major difference was not so much a new currency but the technology behind it. Blockchain has had a huge effect on the internet, and not just for cryptocurrencies, as it is used in many different walks of life.
It has proved to be very useful for the legal profession, the medical profession, and in education among many others.
Bitcoin has had a rollercoaster ride in terms of value. At the start, it was worth just $0.008 per coin and by the end of 2017, it had reached almost $20,000. This was probably far too high, but investors bought it in their droves. Some made a lot of money and others lost as it tumbled back down to a more reasonable amount. It now drifts between $5,000 and $10,000 and there is still money to be made in trading Bitcoin.
Other Cryptocurrency Uses
In the early days, no one really knew what they could do with cryptocurrencies unless it was something they were buying online. Once you have a wallet with some coins in, then it becomes easy and there are many sites that accept them.
These sites do not just accept any cryptocurrency. There are almost 2,000 cryptocurrencies and many of them are totally worthless. There is a need for Bitcoin to have competition and it has that in cryptocurrencies like Ripple, Ethereum, Litecoin, Dash, and several others. They all have their advantages and disadvantages, but really these few larger ones are enough. A market flooded with different cryptocurrencies can be bad for the inexperienced investor who may well choose the wrong one. Sticking to the well known larger ones is a safer bet.
Blockchain enabled payments by cryptocurrencies to be made more cheaply, quicker, and be less hackable. For some online businesses, this meant their costs came down and they received the money in their bank account sooner.
Once the website owners realized this they were able to offer better deals to people paying with the likes of Bitcoin, and still make more profit themselves. One area that embraced this idea was the online casinos that offered better introduction bonuses to people playing with Bitcoin. This idea has waned a little now because of them still being so volatile, but of course, all of the online casinos still accept all the traditional payment methods. Sites like aggregator Oddschecker aid in listing those offering different kinds of cash bonuses and promotions that are associated with traditional methods of payment, and this will only expand as the crypto market crosses over further.
The use of cryptocurrencies then started to spread to offline businesses and apps started to appear to make the payments possible. If a store displayed a sign that they accepted payments by this method, it became as simple as swiping the app over the bill and the payment is made instantly. The amount being spent is irrelevant, and some of the first offline businesses to embrace cryptocurrencies were cafes where you could pay for your cup of coffee with them.
Governments And Cryptocurrencies
Different states in the US have varying views about cryptocurrencies. While some say they do not comply with state laws, others are opening gateways for taxpayers to be able to pay the IRS with them.
Some other governments are going a step further and issuing their own cryptocurrencies. Central banks around the world are looking closely at this, and just as a few examples, we already have the J-coin in Japan, E-krona in Sweden, the Pedro in Venezuela, and Estcoin in Estonia. Other governments, such as the UK, Uruguay, and Kazakhstan, have also said they are moving forward with this option. The Federal Reserve Bank of New York is not discounting the idea but has said it is something for the future and is probably several years away.
One of the principles behind the existing non-government issues is that blockchain has meant that no one owns them. They are not regulated by a board of directors or anything like that. With cryptocurrencies issued by governments, this would not be quite the same. The government would own them, which would take away some of the safeguards the current cryptocurrencies provide.
Some people have even suggested that these government-based ones should not be called cryptocurrencies as that will be misleading. The governments will be in control and able to change the rules as and when they want. For this reason, it has been suggested that a new name needs to be found to collectively describe what will basically be currencies run on computers.
Governments cannot actually do anything to stop the use of existing cryptocurrencies, such as Bitcoin. They are already here, and what remains to be seen is if the government-issued ones affect the current ones in any way.
Do Cryptocurrencies Mean The End For Banks?
At the moment, Bitcoin is valued in dollars, but will there come a time when dollars are valued in Bitcoin? If it ever happens, it is a long way in the future, as the present financial system for currencies across the world works quite well.
Cash is being used less and less, and our income and expenses are all dealt with through our bank accounts. We either pay by card or by online banking, and these methods are both as secure as the banks can make them. Cryptocurrencies are even more secure, though, and that is one of the reasons people are being drawn to them. There are now cash machines specially designed for cryptocurrency wallets, and users like the fact that they can make transactions anonymously.
It is very unlikely that cryptocurrencies will cause the demise of banks, but these huge financial institutions may have to change the way they work to be able to compete. They will have to cut the amount they charge people and make the payments much quicker. Although a payment within the same country can be made and received instantly, a payment to another country can still take a couple of days. This is not the case with cryptocurrencies, and the banks need to find a way to speed things up or face losing customers.
Cryptocurrencies are here to stay; there is no doubt about that. What is in doubt is the way the financial world will utilize their advantages, and which parts they will tie in with existing systems to ensure that their customers have the best financial service they can provide.