Modern society has already taken one major step away from paper currency with the ability to pay using debit and credit cards. However the idea of cryptocurrencies takes it a step further, no longer will payment be an exchange of dollars between accounts but it will be an exchange of completely digital money. A Cryptocurrency is a digital currency that uses encryption to control the generation of the currency and verify the transfer of currency, operating independent of a central bank. Cryptocurrency comes with a number of advantages and disadvantages:
- Anonymous: Is extremely difficult to connect transactions or accounts to real world identities, although this can be considered good or bad depending on your perception.
- Quick and Global: Transactions can be sent and confirmed in a matter of minutes because they are happening on a global network.
- Highly Secure: Cryptocurrency is locked in a public key system, strong encryption means that it’s infeasible for even the most technical hackers break the scheme.
- Complete Freedom: You don’t have to go through any middleman to use cryptocurrency, it’s a software anyone can download and use at their leisure.
- Limited Supply: The cryptocurrency control the supply of money through a schedule embedded in the code, this completely eliminates surprise shocks that would cause unexpected inflation.
- No Fiat Money: The money in your bank account are simply numbers that represents the debt the bank owes you. In cryptocurrency the numbers don’t represent anything besides itself.
- Irreversible: Once a transaction is made, noone can reverse it. That means if you send money to a scammer or hacker that money is lost forever and because of the anonymous aspect of it, you’re unlikely to ever catch the person responsible.
- Untraceable: Cryptocurrency, particularly bitcoin is commonly used in online black markets and for ransomware payments because it makes it impossible for law enforcement to trace the money back to any individual in real life.
Bitcoin is currently the gold standard for cryptocurrency, it is the first and most famous of the bunch. Bitcoin has existed for seven years and has risen from $0 to more than $650 per unit. One norwegian man bought $27 worth of bitcoin in 2009 that is now worth $886,000. Bitcoin has also become the defacto method of payment for ransomware and in dark web markets. In all likelihood bitcoin is going to around for some time to come, but to what scale it will become a normal method of payment is complicated. Despite its many advantages widespread use of bitcoin as a currency would threaten banks and the government’s control over citizen’s transactions. You can’t hinder a user’s transactions with bitcoin, it would be impossible to connect any individual citizen with a transaction and monetary policy would be infeasible because the supply of bitcoin is on a fixed schedule. Not to mention it may potentially put banks out of business if enough users started using bitcoin instead of putting money away in a savings account. Given these reasons I would expect a fair amount of resistance towards the widespread use of bitcoin.