BY SYDNEY SNELSON
In the past decade society has moved away from cash and turned to digital forms of payment, including debit/credit cards and apps like Venmo and PayPal. However, in recent years a new form of currency has popped up and taken the internet by storm: cryptocurrency. Cryptocurrency is a digital currency made from encryption algorithms. This means that it’s not physical, and, therefore, cannot be replicated.
Many people have a hard time grasping the credibility of crypto because its value is determined by people’s perspectives. It is also hard to find a business or product that accepts crypto as payment. This, again, pushes people away from the currency, as it’s useless in day-to-day transactions.
However, cryptocurrencies can provide an alternative to current banking systems and depending on how you feel they might have advantages. To start there is no government regulation (yet), which allows investors to buy and sell as they please. It also cannot be counterfeited, as mentioned before. Unlike paper currency which can be replicated and sold to unknowing buyers, cryptocurrency is written in code. This system is protected by a complex algorithm that acts as a receipt for every transaction. This means that no affair can be altered or refunded. This reinforces crypto security and reduces fraud levels.
But how exactly does a transaction work? Well it involves a few sets of keys and a blockchain:
A blockchain is where the notes of every transaction are kept. Every time a transaction is made it is written in code, and another block is formed. Workers solve this code to create the receipt of all affairs. This process is known as “Mining”. People are paid in crypto for this, and many countries have warehouses full of computers to solve this code.
The most popular form of cryptocurrency is called Bitcoin. This currency was founded in 2009 by a person under the pen name of Satoshi Nakamoto. No one knows the true identity of the mind who created Bitcoin, but their actions have changed traditional banking forever.
Many suspect cryptocurrencies will become the only form of payment within the next twenty years. However, with this speculation comes another one where it’s believed that the government will form a new crypto and force everyone to use it. That would mean banning Bitcoin, Litecoin, Ethereum, and all other forms of cryptocurrency besides their own. This idea isn’t too far-fetched, especially since, according to PBS, “President Joe Biden on Wednesday signed an executive order on government oversight of cryptocurrency that urges the Federal Reserve to explore whether the central bank should jump in and create its own digital currency.” A move like that could legitimize crypto while also consolidating crypto power in a way that would irritate those who have pushed crypto as the future.
This issue also brings up the topic of taxation for digital payments. It’s no secret the federal government loves to tax its citizens, and if they force everyone to switch to their cryptocurrency, taxes will inevitably come into play. This could create a problem with the aforementioned security aspect of crypto. Instead of a market where anyone can buy, trade, and sell as they please, government intervention will likely cause third parties to gain access to accounts, which could lead to an increase in hacking. Anything that isn’t a simple user to user interface could create issues.
There are a lot of unknowns surrounding cryptocurrency, as many people cannot understand the purpose of using it as a form of payment. However, crypto isn’t going anywhere. There’s plenty of evidence suggesting that within the next five years it’ll be more accessible at restaurants and stores. Society is already moving towards dependency on technology. Cryptocurrency is just the next logical extension of that.
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