What Is The Future Of Money?

By Pritha Doegar

The internet revolutionized the world, and now digital currency which is impossible to counterfeit or double spend that is secured by cryptography will take the world by storm. Yes, cryptocurrency and various digitized means of cheaper and faster money transfers are going to be a roaring success the next decade. The prominent among these being the Bitcoin, Ethereum and Litecoin. Even though Bitcoin received its fair share of mocking with currencies such as Dogecoin known as the first ‘meme coin’ and Shiba Inu. However, despite their satirical nature, these currencies have been sought after by many, including Tesla CEO Elon Musk who is a staunch believer of Dogecoin.

Bitcoin was the first blockchain cryptocurrency, which was invented in 2009 by an anonymous founder using the pseudonym Satoshi Nakamoto, it also being the most popular as more than 5,000 different currencies are currently in circulation. It gained popularity among investors because of its high volatility and scarcity considering that there are mere 21 million bitcoins, which makes it equivalent to gold for seasoned investors.

“Cash certainly gives us privacy in our financial lives and you know we have very little privacy as it is… if we were to give up cash, it would mean the last vestiges of financial privacy may be gone,” as Professor Eswar Prasad, Economist and Tolani Senior Professor of International Trade Policy at Cornell University shared during a discussion with Affirm CEO Max Levchin and Christina Passariello.

However, one must consider that transparency is one of the key factors for the success of cryptocurrency.

The blockchains of most cryptocurrencies are peer-to-peer implying there is no involvement of an arbitrator. Each transaction is recorded in a public ledger, which ensures transparency and appeals to most investors and to prevent fraud, these are checked using one of two main validation techniques – proof of work or proof of stake. A blockchain’s decentralized nature indicates that its network is distributed across multiple computers known as nodes, which eliminates a single point of failure. It uses a push mechanism which allows the user to send the exact amount and withhold any further information, preventing identity theft. Another advantage is that it adds diversity in an investor’s portfolio, which improves users’ potential returns, stabilizes their results and reduces portfolio risks.

Digitization has taken over all aspects of our lives, money is no different. Between 2012 and 2021, the price of Bitcoin increased by over 540,000%, with an annual growth rate of 274% in 2020, while the cryptocurrency market is predicted to grow with a compound annual growth rate of 56.4% from 2019 to 2025.

“Even if 95% of today’s coins lose all their value and disappear, the remaining 5% will grow massively,” says Jihan Wu a cryptocurrency entrepreneur who co-founded Bitmain in 2013. Another example of a motivational story is that of Erik Finman, who became the youngest Bitcoin millionaire at 18, as he started his investments at the age of 12 in May 2011.

Cryptocurrency is slowly making waves and is here to stay, it will definitely play a major role in the future economic system, something to lookout for!

By Pritha Doegar