Currencies
Bitcoin: The Digital Revolution in Finance
2024-11-23
Bitcoin emerged during the 2008 financial meltdown and has since become the most popular means of digital exchange. Its creation by Satoshi Nakamoto aimed to provide a peer-to-peer electronic cash system without a trusted third party. With over 90 million users worldwide, its value is determined by the market. Since then, a plethora of digital currencies have followed, with more than 13,000 in existence and around 8,000 actively trading.
Understanding Cryptocurrency
For many, cryptocurrency remains a baffling concept. It is a means of exchange that operates independently of central authorities like banks or the Federal Reserve. Paul Balzano, a staff member for the U.S. House Committee on Agriculture and an expert on cryptocurrency, explained that it "provides a way for people to cooperate without a bank." Matthew Martin, a Houston technology consultant with 10 years of experience in cryptocurrency, added that there is nothing tangible attached to it.It is believed that the upcoming election of Donald Trump for another term in the White House could lead to more favorable regulation for cryptocurrencies. A Washington Post article this week suggested that "normies" are now interested in cryptocurrency, and Trump himself has vowed to make the US the "crypto capital" of the world.The Birth and Growth of Bitcoin
Bitcoin came into being during the 2008 financial crisis, offering an alternative to traditional banking systems. Its value has soared, with a single unit now worth close to $100,000. This has led to the emergence of a host of other digital currencies, with more than 13,000 in total. However, only around 8,000 are actively traded.At the Washington County Chamber's discussion in October, Charles Kiser, the founder of Matewan Digital Holdings in West Virginia, emphasized that this election year has seen cryptocurrency become a part of the mainstream discussion for the first time.Investing in Cryptocurrency: Dogecoin as an Example
Martin has invested in Dogecoin, a cryptocurrency that was launched by two software engineers for fun during the cryptocurrency frenzy. Its coins feature the face of Kabuso, a Japanese dog. In 2020, Martin put $500 into Dogecoin, and his investment peaked at $7,000 before settling back to $3,500. He noted that cryptocurrency comes with significant volatility. "It comes up and goes down," he said. "There are definitely ways to grow generational wealth with this stuff. But it is risky."Cryptocurrency's Controversies and Skepticism
While cryptocurrency advocates like Kiser believe it can improve banking and finance systems, there are also many skeptics and critics. They point to cryptocurrency as a potential avenue for illicit activities such as drug dealing, financing terror groups, and money laundering. Scams and scandals have been prevalent, with the most notable being the arrest and conviction of Sam Bankman-Fried.Joe Piszczor, a Washington certified financial planner, described digital assets as having "not yet shown much in the way of tangible uses, paired with exceptional volatility." He compared it to going to the casino, stating that most people don't have the stomach for the risk. Nan Li, a professor of finance at PennWest University, explained that cryptocurrency "doesn't have an inherent value" and is more suitable for investment than daily transactions due to its rapid price changes and high risk.