The Summer of Cryptocurrency
Bitcoin has seen more than 400% gains year to date. Despite the pull back from its all time highs and all the resistance from the financial industry establishment, Bitcoin and altcoins appear to be on track to set new highs.
Bitcoin and cryptocurrency have forever changed how the financial industry will operate. Cryptocurrency will help by removing the middleman from all transactions. Just like how the internet democratized information, cryptocurrency will democratize trust.
Unlike the status quo, transactions are carried out digitally and made P2P, peer to peer, in a method regulated by the blockchain technology. This is a decentralized database that records each transaction. When a transaction takes place, the process is validated by group of cryptocurrency miners. Each one of them is competing to authenticate the transaction in the network because in return they are awarded respective cryptocurrency. The affirmed transaction is added to the blockchain database. The transactions are immutable, mean it can not be altered or hacked in anyway. It ensures authenticity unlike any other medium.
Politically, cryptocurrencies can help reset how political power is distributed within and without governments. The ability to centrally control the printing press will diminish and with it accountability will be returned to nations with cryptocurrencies as a national currency. As a result, financial responsibility and restraint through accountability will return to society. Furthermore, as cryptocurrencies become mainstream and receive more capital injection, their market valuation will stabilize. As a result, if adopted as a national reserve, countries will have more stable economic situations.
Socially, cryptocurrency will not only create more responsible governments but it can help restore power back to the people. The currency democratizes institutions, facets of governments, and the means of monetary institutions.
Bitcoin was borne out of the ashes of the 2008 financial meltdown. With all the instability exhibited in the monetary system, cryptocurrency was designed with systemic stability not price stability in mind. The price fluctuation that is always shown as a flaw for Bitcoin is a misnomer and will level out with time and further capital investment. The fiat currency system, which all the global currencies are part of, display price stability for the most part but are systemically flawed and guarantee cycles of financial instability.
Bitcoin was design with security being its utmost characteristic not price. Due to its network security, it assures systemic stability. It does this via its hash power; the processing power required to do the necessary calculations to ensure transactions take place on the blockchain. The higher the hash power, the more secure the system becomes. As Bitcoin and cryptocurrency prices rise, the more demand that is placed on the system and accordingly, the higher the hash power rises. As a result, the more secure, the system becomes. This is contrary to the current financial system, the busier it gets, the more financially innovative investors become and the more 2008 meltdowns we will see.
As cryptocurrency increases in value and becomes more mainstream this year, this could be the catalyst that makes the virtual currency appealing to everyone. Large scale investment can began to find its way towards Bitcoin and all other cryptocurrencies later this year. Despite the exponential growth in the past year, cryptocurrencies can see even more growth in the next year as its popularity rises, but even more so the associated societal changes it will bring, will fundamentally alter the way people live and view the world they are in.
