Wrapping one’s head around the craze that is, cryptocurrency can often be downright confusing.
However, despite the influx of uncertainty, the digital commerce could become the global finance standard in the near future.
For starters, cryptocurrency is any form of currency that only exists digitally or virtually, and “usually has no central issuing or regulating authority,” according to Merriam-Webster’s Dictionary. Based on blockchain technology, the digital currency market determines the value due to supply (amount in circulation) and demand (volume of buyers and sellers).
The digital asset uses a decentralized system to record transactions and manage new units, and a computerized coding called cryptography to prevent counterfeit and fraudulent transactions. To date, there are currently over 2,000 cryptocurrencies with Bitcoin being the largest and most popular followed by Ethereum.
To capitalize off the global trend some countries such as, Venezuela, are considering issuing their own virtual currencies, while global regulators, including the U.S. IRS, has defined cryptocurrency as property and not actual currency — therefore issuing guidance on how it should be taxed in 2014.
For Samson Mow, the CSO of bitcoin software company, Blockstream, the idea and potential of governments impacting cryptocurrency is very limited.
“Cryptocurrencies by design cannot be ‘closed down’ because first, they are decentralized, and second, they’re just information,” Mow told Business Insider. “To even try to close them down, you’d have to shut down the internet, and even then it would only be a minor hindrance.”
In terms of the future of cryptocurrency, one expert believes the digital financial system will replace national currencies by the year 2030.
“Cryptocurrency is very much here to stay,” American futurist and author Thomas Frey told Time.com adding, “cryptocurrencies are going to displace roughly 25% of national currencies by 2030. They’re just much more efficient, the way they run.”
What are your thoughts? Will cryptocurrency replace national currencies in the future?