Cryptocurrencies are a type of digital currency that is used to buy products and services, like any other currency, but it only exists in the virtual world. Bitcoin was the first cryptocurrency to be traded: it was in 2009 and its value was approximately one dollar. Since then, its price has reappraised and multiplied like no other value on the stock market.
Tempting Investment
In October 2021 ProShares Bitcoin Strategy was launched, the first bitcoin exchange-traded fund (ETF), that is: an investment fund that is traded on the stock exchange (as if it were a product or service) and whose value depends directly on the value of the cryptocurrency. Shortly after the announcement, Bitcoin shares set an all-time high by exceeding €56,000 per share. The news went around the world because the launch of this bitcoin ETF took place on the Wall Street Stock Exchange in New York (United States), one of the main stock markets in the world. Wall Street trends in investing are followed in stock markets around the world, which could encourage other foreign investors to bet on Bitcoin and that would increase its value even more. Cryptocurrencies are not issued by any monetary authority, so they do not follow any regulations or base their value on assets or reserves in banks.
Possible Setbacks
Economic experts warn about the volatility of cryptocurrencies, whose value can vary rapidly in a very short time and also cause millionaire losses. The Chinese government, for example, has approved several laws to prohibit the use and issuance of bitcoins because they are considered too risky for the country’s economy. This has generated several drops in the price of the cryptocurrency around the world. In order to be able to operate with bitcoins (or any other cryptocurrency) you must have a virtual wallet: an application that is used to store bitcoins and that has the necessary algorithms to encrypt and decrypt the currency. You can only pay or receive money from other users or companies that have a virtual wallet. The accounts where the bitcoins are stored do not require a name or personal data. This guarantees the anonymity of cryptocurrencies, but there is also no way of knowing where the money comes from or if it comes from illicit activities. Furthermore, most experts continue to point out that Bitcoin and other cryptocurrencies do not have the endorsement of a central bank or institutions such as the International Monetary Fund or the World Bank, which can intervene in the event of an economic crisis or regulate its operations in the markets.
Growing Popularity
Although it is not yet a very common currency, more and more companies and sectors are joining the digital money business, such as the virtual payment platform PayPal, whose users can already pay in Bitcoin. Cryptocurrencies are also an important alternative in some African or Latin American countries where the economic crisis causes the local currency to depreciate and lose its value. In these cases, investing money in digital currencies allows to preserve its value. The government of El Salvador, for example, has decided to adopt cryptocurrency as its official currency as a way to withstand the underground economy, in a country where 70% of the population does not even have a bank account. Moreover, cryptocurrencies are becoming acceptable means of payment around the world. Blockchain technology is reliable because it cannot be falsified, manipulated or changed. No other technology allows you to send money from one part of the world to another without an intermediary to carry out the transaction.
Promising Future
Cryptocurrencies have gone from unknown to the protagonist in a very short time. In recent years, the conception of physical money as it is known has evolved and has given way to digital money or the so-called cryptocurrencies. Worldwide, 45 million people already use bitcoins, according to data from Blockchain.com. Even the entertainment industry websites have been allowing its users to pay with bitcoins where you can find a list of the top bitcoin gaming sites. Each site scores highly in terms of security, reputation and bonus variety. Moreover, when using cryptocurrency, you have full control over your money with no questions asked. All you need is a computer or mobile phone and you can transact with whoever you want whenever you want.
In conclusion, cryptocurrencies are very likely to become the money of the future, and completely shift the monetary system we have today.
