Alternative Currencies Around the World – Part One: Cryptocurrencies –
What started with the invention of virtual wallets like Paypal that could be used to send money around the globe has spawned into cryptocurrencies – virtual alternatives to government-issued notes that can be traded around the world by folks that agree on their value. Banknotes have been the number one method for humans to facilitate trade until very recently. The information age has brought on a totally new wave of currency trends, with the promise of digitizing our transactions even more than ever. Even we have hopped on board the Cryptocurrency train and began to accept payments in Bitcoin.
In this first part of our series on alternative currencies around the world, we’ll look at cryptocurrencies like Bitcoin and try to understand how they function, where they’re traded, and where they could be headed in the future.
What is a Cryptocurrency?
A cryptocurrency is a digitally traded currency whose production and transmission are regulated by data encryption, in the same way that the production and transmission of normal currencies are regulated by government oversight, monetary policy and physical security features on currency. The incredible thing about cryptocurrencies like Bitcoin is that the cheques and balances of this cryptocurrency are maintained without a central authority – they are built into the system using highly technical encryption techniques.
The Most Popular Cryptocurrencies – What Are They?
The most well-recognized cryptocurrency around the world is Bitcoin. This was the first virtual currency to be used popularly around the world. It was invented by Satoshi Nakatomo, a computer programmer who determined how to combine virtual wallets and P2P file-sharing to create a self-verifying system of virtual money.
Today, there are hundreds of cryptocurrencies being traded around the world, although just a few dozen have reached a market capitalization of $10 million or more. From Dogecoin, a silly currency traded on Reddit and based on an Internet meme, to the now-inactive Coinye, which used American Hip-hop artist Kanye West as its mascot, citizens of the virtual world have appropriated Nakamoto’s technology and used it to poke fun at celebrities while trading huge amounts of virtual cash.
Simultaneously, currencies like BlackCoin, Burstcoin, DigitalNote and Ethereum have innovated new security features and encryption methods that promise to make digital currencies the future of transactions in the next several decades.
Benefits of Trading in Cryptocurrencies
Virtual currencies have gained popularity in large part due to recent revelations about government intelligence focusing on the behaviors of everyday citizens. Cryptocurrency transactions are not associated with real-world identities, meaning the government can’t track how much virtual money you own.
Transactions occur almost instantaneously and in real-time, and virtual funds can be sent anywhere in the world at the click of a button. The 30-character strings that comprise a bitcoin address make hacking the currency essentially impossible – they’re more secure than the deepest vault, and anyone can start using them.
There are some drawbacks however; because cryptocurrencies are deregulated and decentralized, there’s nobody to call for help when something goes wrong. Transactions are permanent and nobody in the world can reverse them, so proceed with extreme caution when sending money to folks that you may not trust.
Cryptocurrencies are an exciting innovation, but they may be slightly before their time. Although we are probably moving towards a cash-less society, it seems unlikely that deregulated currency will ever have a strong foothold in our present era of big government control. For now, cryptocurrencies are a volatile asset that’s fun to trade, but not necessarily the best long-term investment for your money.