Article submitted by NYC Generation Tech.
Summary: Cryptocurrencies have become a hot topic recently. Continue reading to see how Bitcoin is impacting currency today.
One of the latest trends that has been getting quite a large amount of buzz recently is ‘cryptocurrency.’ A cryptocurrency is a digital form of currency in which encryption techniques are used to generate more units of the currency. The concept of a currency that is decentralized, and thus not bound to a specific country or region of the world, is not new.
BItcoin, arguably the most famous cryptocurrency, was launched in 2008 but has only recently started to transition from the realm of niche communities to a concept the average consumer has at least heard of. Still, the question of how impactful Bitcoin has been on digital currency still stands. Is this a fad or does it have serious potential to change how we handle currency?
More of an Asset
When Satoshi Nakamoto first came up with the idea for Bitcoin, he intended for it to be used as a peer-to-peer electronic currency that did not require regulations from banks or other large institutions. Over the past year, Bitcoin has jumped from $777 to a high of $17,000 and currently sits just above $11,000. The value of a Bitcoin is currently rising and falling by too much for it to be taken seriously as an actual form of currency. Merchant account companies work to offer reliable methods of handling credit card transactions but there aren’t any quick and affordable methods to handle Bitcoin transactions yet. Rather, Bitcoins have mainly been used for investments, quite similar to how someone would invest in a stock in hopes of its value eventually increasing, ultimately yielding him or her a profit.
Not Widely Accepted Yet
In order for Bitcoin to be treated as a currency, it has to have a value that can be conveniently exchanged for goods or services. As it currently stands, a reasonable payment gateway to handle Bitcoin transactions does not exist. Exchanges can be lengthy and expensive, with transaction fees averaging over $11. This could discourage both stores and consumers from using the currency like they would a US dollar. It would seem impractical to buy a pack of gum or a sandwich, for example, if the transaction costs ended up exceeding the actual costs of the goods.