Is Bitcoin the Future?

Sam Braun, Staff Writer

The steam engine, revolutionary. The telegraph, unthinkable. The internet, life-altering. Bitcoin… eh? In the past few weeks, the world’s most recognizable cryptocurrency, Bitcoin, has been stirring up hype all over the globe, but no one really knows what it is, or its true potential.

 

To begin, a cryptocurrency is defined as a digital currency that is independent of a central bank. There are hundreds of them, such as Ethereum, Zcash, Ripple, and of course, Bitcoin. In order to understand what a cryptocurrency is, though, one must know the foundations of regular, physical currency. A long time ago, people carried gold with them as a form of money, but lugging all of it around was a hassle and carrying it left them vulnerable to theft. As a solution, the beginnings of what would eventually become banks would hold their gold and, in return, give an official bank note to the owner. People began using their notes as currency, instead of withdrawing gold every time they wanted to buy something. Even though the notes were just paper, they were tied to a definite amount of gold.

 

Fast forward a few centuries, and people still use their bank notes issued by a central bank (in America., that would be the Federal Reserve) as money. But there is a big difference today: our money is not tethered to anything. There is no physical value behind the bills we have in our wallets, only the belief that it’s valuable. Despite this, banks still issue, hold, and lend money, yet they take portions of their customers’ wealth through interest and other fees. This is where Bitcoin and other cryptocurrencies come into play.

 

Rising national debt, political corruption, and distrust of banks all contribute to the growing fear of a default. A default is basically when the United States can no longer pay its debts, rendering the world’s chief currency useless. Keep in mind that most modern currencies are pegged to the USD, so if it fails, all others will follow. Bitcoin is not tied to anything physical, much like the US dollar. However, it is a decentralized currency, meaning that it has no central bank. Instead of relying upon a government, Bitcoin is regulated by thousands of unhackable algorithms, leaving any kind of corruption, and regulation, nonexistent.

 

With that being said, the value of Bitcoin is incredibly unstable and there is no way to reduce this volatility. For example, at 12:56PM on December 20th, one Bitcoin was worth $17,813.59, but hours later, at 10:22PM, the value dropped to $15,716.62. While a 12% decrease in ten hours may not seem like much, the US Dollar dropped only 2.8% since the end of 2015.

 

Not to mention that since there is almost no regulation on Bitcoin, making it virtually untraceable. This, of course, is why the majority of Bitcoin users use it for purposes of ransom, illegal black markets, illicit drug trading, and weapon sales.

 

This all paints a very bleak picture of Bitcoin. Yet, the reliability of our government and the Federal Reserve is fading and the possibility of a default is closer than ever, leaving Bitcoin as a possible back up. The only cure to astronomical volatility and social unacceptance is time, and when the right time comes, Bitcoin will be the future.