What’s New with Cryptocurrency
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Cryptocurrency, in contrast to hard currency like the dollar or euro, stands for digital currency that has no physical counterpart---no coins or bills. Digital currency exists entirely on the web, and all transactions, from buying a meal at a restaurant to renting a hotel room, require both parties to have access to the internet in order to make a deal. Bitcoin remains the most well-known cryptocurrency and has been used recently for some transactions that are much larger than buying a pizza or a chair from Overstock.com. According to Newsday, a person in Florida in 2013 purchased a Tesla for 91 bitcoins or about $100,000. Coindesk noted that the largest bitcoin transaction of all time occurred on November 11, 2013 for an anonymous transaction worth $147 million on that date. Because all bitcoin transactions are public, one can simply look online at the recent largest transactions and see that large sums of bitcoin are trading hands all the time. Just today, in the “Largest Transactions” section of Blockchain.info, a number of transactions within the past few hours have ranged from $250,000 to nearly $1,000,000.
In 2017, Bitcoin has seen a remarkable rise in value. Just for comparison, when I blogged about bitcoin mining back in April, a bitcoin was valued at $1,249; today, a bitcoin sells for $4,325, which is an almost 250% increase in value in less than seven months. Part of the surge in bitcoin value stems from Japan announcing that it would officially license bitcoin exchanges, and according to the Wall Street Journal, Japan issued its first license a week ago on September 29th. With a sovereign state officially recognizing bitcoin and taking steps to regulate bitcoin exchanges, the cryptocurrency jumped in value. In contrast, China recently moved to shutdown cryptocurrency exchanges, citing the high risk of fraudulent activity in Initial Coin Offerings or ICOs. ICOs are a type of crowd funding that sells a portion of a new cryptocurrency to investors for hard currency like dollars or another cryptocurrency such as bitcoin. Regulators in South Korea and the United States have also noted worries about fraudulent activity around cryptocurrency. The US Securities and Exchange Commission has created a special cyber unit in part to investigate ICOs and cryptocurrency.
Bitcoin stands atop the market as the world’s largest and most recognized cryptocurrency. According to WorldCoinIndex, bitcoin has a market cap of $72.2 billion, which exceeds the next nearest cryptocurrency, Ethereum, at $28.7 billion. Ethereum was developed by Vitalik Buterin a Russian-Canadian computer programmer and been publicly exchanged for over two years. Ethereum went through a staggering jump in value this year going from $11 for an Ether to $289 today with some higher spikes in between. Another apparently stable and growing cryptocurrency is Litecoin, which, for the most part, works the same as bitcoin. However, Litecoin boasts some technical superiority over bitcoin in that it can process more transactions than bitcoin and at a speed four times faster than bitcoin. Other cryptocurrencies have names such as Dogecoin, which has a Shiba Inu as its mascot. Initially introduced as a “joke currency,” it has apparently become popular online and now trades for less than a penny a dogecoin but has a market cap of $113 million. Dogecoin has become a popular currency for tipping online and has a vibrant user community.
New cryptocurrencies emerge all the time. The WorldCoinIndex currently lists the top 100 digital currencies along with their current exchange rates and market cap. Just glancing at the exchange sites demonstrates a growing number of cryptocurrencies many of which fluctuate, sometimes wildly, in value. The wide variety of cryptocurrencies fueled by the massive increases in the value in bitcoin, ethereum and others over the past few years has drawn many speculators to this market. Recently, the greatly respected CEO of JP Morgan Chase, Jamie Dimon, in an interview on CNBC disparaged bitcoin, calling it a fraud. To be fair, the digital currency market has had its shares of ups and downs. However, the underlying technology that supports online currency provides a stable, fast, and currently un-hackable way to exchange money on the internet. Crypto currency will continue to grow in value and reach with some unexpected bumps along the way, but it is none the less here to stay.