It is no secret that ever since the Bitcoin boom, the general awareness around all forms of cryptocurrencies has grown.
It is no secret that ever since the Bitcoin boom, the general awareness around all forms of cryptocurrencies has grown. What started with just one coin has now grown to over a thousand different types of coins and the number of coins continues to increase every day. While it is expected that a majority of these cryptocurrencies might eventually fizzle out, there are some who have the potential to change the very way in which our economic systems function.
Let us take a very quick look at the history of cryptocurrencies - the present state of where they are - and what the future holds for them.
To understand the future, it is critical to know the past.
Bitcoins started off this grand cryptocurrency revolution back in early 2009. Since then there have been a number of new introductions in the cryptocurrency space and names like Ethereum and Neo have been doing really well - and they look like they’re here for the long run.
Also read: What are Altcoins
Basically, cryptocurrencies started off in 2009 with the arrival of Bitcoin. Bitcoin was created by a man (or a group of people) who goes under the pseudonym, Satoshi Nakamoto. As of now no one really knows who Satoshi Nakamoto is. However, he holds about a million Bitcoins and it is critical for him to maintain his privacy.
Find out: Who is Satoshi Nakamoto
The growth of Bitcoins was painfully slow in the early years - but over time, as markets grew confident of the coin’s long-term success, the value of Bitcoins started to boom. Here’s a quick look at the historic growth of Bitcoins:
Bitcoin started off in 2009 and it was valued at $0.
In the entirety of 2010, bitcoin didn’t even touch $1 and it’s the highest point was $0.39
Bitcoin touched $29.58 in 2011
Bitcoin crossed $210 in 2012
2013 was a big year as Bitcoin crossed the $1,000 mark in November.
In 2014 the highest value of the currency stayed about $985
2015 saw bitcoin fall to a low of $219 while the highest point was $461
Bitcoin crossed $950 again in 2016
2017 has been the best year for bitcoin as it started off with about $950 and crossed $7000 in late October.
As we write this, Bitcoins have peaked to an all time high. This is the October of 2017 and the current Bitcoin value is flickering between $6000 - $7000. Questions are already begin asked and fingers are being pointed at alternate currencies and the future of altcoins amid a major surge in bitcoins.
Bitcoin witnessed a major hard fork in the August of this year when Bitcoin Cash was created. Barely a few months since then, another fork is all set to take place as Bitcoin Gold is all set to arrive.
Presently, the awareness around cryptocurrencies is at an all-time high and while it has made it to the attention of many tech-savvy users as well as those interested in investment opportunities, it is yet to become ‘mainstream’. Some governments have begun to pass laws around the use of cryptocurrencies and making them taxable and accountable.
However, the biggest problem that governments have with cryptocurrency users is that they possess unaccounted income. The money stored in exchanges and wallets go unaccounted for, especially if the transaction takes place in the form of cash, or for certain purchases. Moreover, the online drug trade is also thriving on cryptocurrencies - which is another big reason that governments want to regulate this alternative economy.
At the time of this writing, the cryptocurrency trade still functions as a largely unregulated market - which is bound to change with the passage of time and increase in awareness.
If the markets continue to be bullish and investors continue to back cryptocurrencies for the long run, there is a very good chance that there may come a point of time when blockchain based economies might become a reality.
Instead of the real-world economy absorbing the cryptocurrencies as a part of its own, a day might come where this parallel economy absorbs the real-world economy. A blockchain based economy fuelled by cryptocurrencies could be beneficial for a number of reasons.
This cryptocurrency based economy will ensure that the money that comes from the government funds is invested for all the right reasons and is sent to the right people. This will further improve accountability and transparency, where each and every transaction will be publicly accounted for and can be tracked by anyone.
While a number of merchants have already begun to accept bitcoins, they’re far from being as popular as other mainstream payment services. In the long run, given the markets of cryptocurrencies stay stable or flourish, it is expected that acceptance will become more mainstream and even major players like Amazon and Walmart may begin to accept cryptocurrency tokens.
As of now no government has officially accepted the cryptocurrency system. While some banks have begun to take the step forward, governments are still examining this new, digital economy from all sides before taking any step forward.
There are many aspects about cryptocurrencies which make governments uncomfortable, and till all these issues are resolved, it is very unlikely that governments are ever going to accept cryptocurrencies. Some of these issues are:
Tax Evasion: One of the biggest problems that cryptocurrencies impose is that of unaccounted income. If your money is stored in your bank accounts, it can be sniffed out by the government. The tax authorities can raid physical property to find out hidden cash - but what about a digital wallet that they do not know exists? This gives rise to unaccounted income as well as money laundering, where cash can be exchanged for cryptocurrencies without a trace!
Decentralized Nature: The decentralized nature of the cryptocurrency system is again something that makes the governments uncomfortable as there is no central authority that can be held accountable. Moreover, existing Cryptocurrencies might lose value and newly introduced cryptocurrencies might gain value at any given point of time - which is very unstable for a national economy to function.
Instability: As discussed above, the unstable nature of cryptocurrencies is one of the biggest reasons why governments are unwilling to adapt it for official transactions. When it comes to fiat currency, the currency can be valued or devalued depending upon the need and the nature of the economy. The cryptocurrency markets do not really give governments this kind of a control.
Till these questions are addressed, the future of cryptocurrencies will remain doubtful.