Although one of the greatest values of cryptocurrency is its transparency, it is notoriously difficult to get a good theoretical grasp on.
You might even call it cryptic, if you were inclined to puns.
In fact, the name points to the fact that the currency is generated using cryptography and sophisticated encryption algorithms.
The transparency that makes cryptocurrency so attractive to some financiers has to do with the blockchain, which is how cryptocurrency is tracked.
Each transaction is logged automatically, anonymously, and in an open-source and freely available ledger. This removes the need for a third party, such as a bank.
But what is cryptocurrency?
At its core, it’s money. But it’s not money like most people are used to.
Instead, cryptocurrency is generated, tracked, and stored entirely digitally. It is BitCoins, LitCoins, and Ether.
The move from gold to paper money was largely driven by portability, and led to the creation of fiat currency managed by banks.
The move from fiat currency to cryptocurrency, if and when it happens, will be a similar evolution.
It is less susceptible to fraud because it can’t be counterfeited, offers lower fees to users, is available to everyone with access to connected devices, and allows you to fully own your currency.
Apart from cash under a mattress, no current systems allow that same level of ownership.
But cryptocurrency has drawbacks, as well.
Not least of which is the fact that it’s a challenging concept to understand, and therefore it’s difficult to get widespread public backing.
When even cryptocurrency experts say that “Bitcoin’s value cannot be reduced to one single element or feature,” and require lengthy articles to define its value in various forms, it’s going to be a challenge for non-experts to grasp.
Beyond that initial difficulty, cryptocurrencies may be safer when it comes to certain kinds of fraud or theft, but they are at significant risk of loss due to technical glitches, human error in choosing weak passwords, and exchange businesses failing without reimbursing customers.
Cryptocurrency represents another technology that has the potential to radically disrupt current business practices.
It is a currency for a digital age – created online, tracked online, stored online.
But even in Kenya, the world’s leading adopter and innovator in mobile commerce, cryptocurrency is struggling to gain traction because of a lack of business adoption and available apps.
However, despite these early struggles, cryptocurrency is likely to continue making market gains.
In a destabilized global economy, cryptocurrency offers the potential for greater transparency and security than banks can currently offer, and as cryptocurrency is adopted, governments will increase regulation.
Increased regulation, although in many ways antithetical to some of the core values of cryptocurrency (with its roots in libertarianism) will offer stability and public trust.
As technological disruption in the form of automation continues to threaten the current concept of work, the idea of a UBI has surfaced repeatedly as one possible solution.
About Tiffany Sostar
Tiffany is a writer, editor, academic, and animal lover who came late to her appreciation of pets. At 18, a rescue pup named Tasha saved her from a depression and she hasn't looked back. She has worked as the canine behaviour program coordinator for the Calgary Humane Society, and was a dog trainer specializing in working with fearful and reactive dogs for many years. She doesn't have any pets right now, but makes up for it by giving her petsitting clients (and any dogs she comes across on her frequent coffee shop adventures) extra snuggles.
