Crypto Comeback | Kyle Kim
In 2010, a programmer named Laszio Hanyecz ordered two large Papa John’s pizzas for himself. When it came time to pay, he decided to use this new transaction system that he was excited about, known as Bitcoin. Specifically, he paid for the pizzas with 10,000 Bitcoins, which equated to about 40 dollars at the time. Now over a decade later, 10,000 Bitcoins amounts to hundreds of millions of dollars. What happened?
One of the most unforeseen effects of this ongoing pandemic is the massive changes that occurred within the stock market. It is becoming increasingly clear that, with massive changes in our day-to-day lives, comes equally massive disruptions in our economy. This idea is perhaps most evident in the current cryptocurrency market, which has seen exponential growth in the past months of the pandemic. However, cryptocurrency is not only indicative of economic shifts, but also reflects the massive effects of social media, as well as the extent to which people will go for their investments.
Although over 6,700 different cryptocurrencies exist today (Yahoo Finance), perhaps the most well-known, gold standard for cryptocurrency is Bitcoin. Bitcoin, which was invented in 2009, serves as an alternative to traditional money systems, as it is purely digital, with no physical form. Since 2009, its value, as well as its ubiquity, has increased exponentially, with its value per token soaring from eight cents in 2010 to nearly 50,000 dollars this year. Similar cryptocurrencies, such as Ethereum and Dogecoin, have also experienced massive increases, with the latter being primarily fueled by internet virality as a meme crypto.
One significant aspect to the growth of cryptocurrency is its position within our current currency landscape. Crypto is not associated with any banks, governments, or legal systems, which allows it to be inherently more secure than other methods of online transaction, such as online banking, online transfer systems, and digital wallets. However, this unregulated nature leads to certain consequences. For instance, the highly secure nature of cryptocurrency means that transactions cannot be traced. Consequently, individuals can use cryptocurrency to purchase potentially illegal items with little concern of being financially observed. Furthermore, cryptocurrencies often widely fluctuate in value in a way that traditional currency does not.
With cryptocurrency also comes something called crypto mining. As anyone who has wanted to enter into PC gaming in recent months has quickly found out, cryptocurrency mining has been shaking up the computer part market as of late. Simply put, individuals interested in crypto mining have been buying powerful computer parts, specifically graphics processing units (GPUs) and building monster computers to enter new units of cryptocurrency into circulation. The main benefit of this is that miners can earn cryptocurrency without having to actually put down money for the token. With the high start-up cost and rather complex computer knowledge required to establish such a set-up, it certainly isn’t for everyone, but many consider it a worthy investment in the current market.
Finally, for those interested in cryptocurrencies, there have been a variety of interesting developments in the use of the alternative currency in everyday life. For instance, on May 3, the Oakland Athletics were able to sell two tickets to their game against the Toronto Blue Jays with Dogecoin. The transaction marked the first Dogecoin transaction in MLB history, with the two seats selling for 100 Dogecoin (around 40 dollars). Furthermore, Tesla recently announced that their cars could now be bought using Bitcoin. Of course, with Elon Musk being such a huge proponent of cryptocurrencies recently, this is not a surprise. Essentially, cryptocurrencies are beginning to fulfill the role that supporters have been envisioning since Bitcoin’s release: serving as an actual means of completing daily transactions.
While investing in cryptocurrency may not be for everyone, its niche role within the economy cannot be overlooked. With proponents of crypto growing everyday, it seems that these digital currencies may soon become an alternative to traditional money systems, or even the norm. At the very least, it’s an interesting variable within the economic climate, and one whose future seems bright.