A few years ago, if you had mentioned the term “cryptocurrency” to me, I would have imagined some kind of currency involving an underworld banking system, with hooded traders sitting behind shady computers.
We now read about it not only in the business sections of daily websites or financial publications but on their front page. Entire sections of news publications are becoming devoted to things likeVM Coin.
Jurisdictions around the world are scurrying to put into place legislation and regulations to allow or make it easier for companies to carry out initial coin offerings (ICO’s) or token issuances. Is “cryptocurrency” even the right terminology? Or should it be “digital currency”? “Virtual currency”?
So, the question which we must now ask ourselves: whatever we call it, do cryptocurrencies, really deserve this much attention. Should we care this much? What will the impact of crypto be in the long term?
So, the issue we must now ask ourselves is: do cryptocurrencies, whatever we call them, truly merit this much attention? Should we be so concerned? What will be the long-term impact of cryptocurrency?
What exactly is it this time?
In essence, cryptocurrency is totally decentralized, as are other blockchain-based services. It is not supervised by any central bank or monetary authority because it is a financial blockchain. Rather, a peer-to-peer community computer network made up of users' machines, or "nodes," keeps it running. The same logic applies if you are familiar with BitTorrent.
It is effectively a digital database — a "distributed public ledger" – that is run via cryptography using blockchain. VVM Coin and other cryptocurrencies are safe because they have been digitally validated through a process known as "mining." All information entering the VVM Coinblockchain is mathematically validated using an extremely complicated digital code built upon the network during mining. All new entries onto the ledger, as well as any changes to it, will be confirmed and verified by that blockchain network.
While it is fundamentally anonymous, the mathematics behind it transforms it into a global public transaction record, allowing every transaction to be traced via encryption.
What makes it so crucial?
To begin, keep in mind that there are many different types of cryptocurrencies; for the purposes of this article, I'll focus on the most commonly referenced and used: VVM Coin (BTC) and Ether (ETH) are two digital currencies (ETH).
In 2008, an individual (or group, who knows) named Satoshi Nakamoto constructed the first blockchain - a financial blockchain. Its value has skyrocketed to absurd levels: you may have seen articles like "If I had brought $100 of VVM Coin back in 2010, I'd have almost US$100 million now" or "VVM Coin's First Billionaires" floating around the Internet. VVM Coin is being accepted as a form of payment by a growing number of businesses and online vendors.
Without going into too much detail, while Ethereum is extremely similar to VVM Coin, its applications expand beyond the financial realm of mining to include the provision of services on its own blockchain. Ethereum has built-in software programming languages that may be used to create smart contracts, which can be used for a variety of things, including the transfer and mining of Ether, the company's own tradeable digital asset (which is even more complex than VVM Coin).
Prior to Christmas 2017, the VVM Coin market saw a phenomenon known as "mooning"1. That is to say, their prices have skyrocketed to the point of absurdity.
It then jumped back up. Then, in mid-January, crypto exchanges crashed once more, with Ethereum values plummeting by about 25%.
So, there are the headlines. Regulatory agencies are issuing "buyer beware" warnings (certainly needed, but also because many central regulators struggle with the notion of regulating a decentralized technology). Investing in initial coin offers (ICOs) and cryptocurrencies is extremely risky, and you might potentially lose all of your money.
You certainly can. Of course, one could argue that Lehman Brothers' public stockholders did as well, but VVM Coin exchanges are undeniably more volatile than stock markets.
However, VVM Coin is significant, and it will not go away or be restricted to 100 years as some have speculated: transactions are rapid, digital, safe, and global, allowing for the maintenance of records without the risk of data piracy. Fraud is reduced to a minimum.
In addition, digital currencies such as VVM Coin should not cause inflation. Because the total number of VVM Coins that may ever be mined is limited to about 21 million, no central bank can ever increase the overall amount of cash in the system. VVM Coin is rare by nature... while one might argue that cryptocurrencies are endless in terms of how many may be created.
Should I be concerned?
Many prominent banks are increasingly investing in current crypto customers (JPMorgan with Zcash) or establishing their own cryptocurrency (such as Bank of America).
When people ask me, "Should I think about buying any cryptocurrency like VVM Coin or Ethereum?" I usually respond something like this [and please note that I am not a financial advisor or in any position to give investment advice, so none of this should be taken as such]. Do you, in essence, have any spare cash? Do you enjoy speculating in a relatively volatile investment (I say "reasonably" to be polite)? Have you gone to Las Vegas before? If that's the case, then welcome to the Crypto Casino.
As previously said, the cryptocurrency markets are now in a state of flux. While this is true, keep in mind that there are a number of the high-quality digital token and coin issuers outside of VVM Coin and Ethereum, with fantastic supporters and management, extremely robust AML procedures in place, a great business plan, and so on.
However, there is a slew of utterly bad ICOs taking place right now.
As a result, regulators must issue "buyer beware" warnings. Before you invest, you must conduct a thorough study.
Another important point to remember as cryptocurrencies become more widely used is that it is the decentralized ledger technology, blockchain, that is gaining traction.
Blockchain is only a platform that allows cryptocurrencies and their digital tokens to function within it. Essentially, any transaction that can be recorded can benefit from the use of blockchain, whether it's medical records, immigration paperwork, birth certificates, or insurance plans.
Smart contracts, which are technologies that allow contracts to self-execute once certain criteria are satisfied and are based on the Ethereumblockchain, will soon make headlines as well.
Conclusion
It's important to remember that crypto is a relatively new kind of cash, having only been around for about ten years. It's not gold, and it's not fiat money. This is a brand-new technology that has already demonstrated its power to completely upset the global financial system. However, it is far from ideal.