Towards the end of 2017, and as the New Year began, Bitcoin became one of the hottest investment trends across the globe. Many remarked that it is secure, and as much a sure thing as any other good investment on the market. Yet, as its prices begin to plummet, questions around the longevity of cryptocurrencies arise.
According to United States Senator Thomas Carper; “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” Understandably so.
The English Oxford Living Dictionary defines cryptocurrency as; “A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. ‘Decentralised cryptocurrencies such as Bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation’.”
Cara McGoogan of the Telegraph Group confirms that cryptography was born out of the need for secure communication in the Second World War. “It has evolved in the digital era with elements of mathematical theory and computer science to become a way to secure communications, information and money online.”
Bitcoin is (currently) the top cryptocurrency. Justin Jaffe contributor for CNET, confirms that this means there are no bills to print or coins to mint. “It’s decentralised, there’s no government, institution (like a bank) or other authority that controls it. Owners are anonymous; instead of using names, tax IDs, or social security numbers, bitcoin connects buyers and sellers through encryption keys. And it isn’t issued from the top down like traditional currency; rather, bitcoin is ‘mined’ by powerful computers connected to the Internet.”
Will the “bubble burst”?
Many view cryptocurrencies with circumspection, questioning how long it will be before the “bubble bursts”. When asked where Bitcoin, Ripple, Ethereum, and other Cryptocurrencies will be in the next two decades, Panos Mourdoukoutas (Professor and Chair of the Department of Economics at LIU Post in New York, also teaching at Columbia University) told Forbes Magazine that investors should be cautious.
“Thus far, the cryptocurrency roller coaster has helped speculators who have been on the right side of the market to amass fortunes. Sooner or later, speculators who play this game will find themselves on the wrong side of the market, losing the fortunes they amassed early on and then some. That’s why cryptocurrency investors should look beyond the current roller coaster, and ask where cryptocurrencies will be 20 years from now,” says Professor Mourdoukoutas.
Interestingly, the Editor of Forbes Magazine states that; “Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don’t own any Bitcoin.”
Proponents of cryptocurrencies, and Bitcoin in particular, disagree. On the 6th of February, CoinDesk data revealed that Bitcoin had a market evaluation of $135 billion. Although the price of the currency had plunged over last few weeks, this marked a resounding recovery.
The Co-founder of the Gemini Exchange, Cameron Winklevoss, believes that Bitcoin could become worth more than 40 times its current value, and is similar to gold as a commodity. In an interview on CNBC, Winklevoss said; “Taking bitcoin in isolation, putting all the other assets aside, we believe bitcoin disrupts gold.”
Any investment contains an element of risk, even if some are greater than others. We may not be assured that digital money will last forever, but do we know whether physical notes and mints will retain their value? If you choose to invest, do your homework, play it safe, and invest only what you’re willing to lose.
To view a full list of cryptocurrencies available, CLICK HERE.