Why Cryptocurrencies Matter in the Real World

For most of the last eight years we’ve heard repeated claims that cryptocurrencies don’t matter. First, in 2009, it was Bitcoin; dismissed as a gimmick which would fade away in time. Next, when other currencies began in to follow in 2011, they were try-hards established by con-men looking to make a fast (or in some cases, slow) buck. As Bitcoin began to flourish, it was viewed as an anomalous blip, and as it and other cryptocurrencies began truly finding their feet and making serious value gains, they became a bubble, just ripe for bursting. There are some who still think that the last statement is true, and that despite Bitcoin surpassing the US$10,000 (£7,307) mark, and Ethereum hitting a US$522 high — and climbing by the day — that it’s all going to come to a grinding halt. Perhaps they are right, but there is nothing in the evidence to suggest that it’s so. Slowly, but surely, cryptocurrencies are becoming an integrated part of the global financial system, and it’s looking unlikely that they are ever just going to fade away.

Meet the Leading Crypto Players

Anyone who has the smallest interest in either finance or technology, will no doubt know that Bitcoin is where cryptocurrency began, and it’s still the leading player in the cryptosphere. With the current excitement surrounding the escalating price, Bitcoin is hardly out of the news, but there are plenty of other crypto contenders, building up towards snatching currency crown.

• With barely four years under its belt, Ethereum already has a market cap exceeding US$29 billion, and it’s on a steep upwards trajectory. At the beginning of 2017, Ether was only just hitting the US$8 mark. By November it had reached a high of US$522. More than just a currency, however, Ethereum is a decentralised platform, which enables apps to run exactly as intended, without risk from fraudulent activity.
• Ripple is a real-time gross settlement system network. It has a market cap of $9,191,277,586 and is currently one of the most affordable currencies to invest in — selling for just US$0.24 at the time of writing — but its price has gained almost 4,000% in a year. Projections for the coming year are strong.
• It was one of the earliest currencies to be created with Bitcoin’s open source code in 2011, and Litecoin is still going strong. More or less a faster version of Bitcoin, it’s not had the huge success of its digital big brother to date, but its value has increased by 2,000% this year, reaching a value high of US$93.29 at the end of November.
• A newcomer to the market, BitcoinCash was created in August 2017. It is described as a ‘fork’ of the original Bitcoin and was created with the aim of being able to increase the number of transactions that can be processed at one time. Consequently, its block size has grown from 1 MB to 8 MB. Ultimately, its target is to provide a viable alternative to PayPal. At the time of writing, it is valued at US$1,380, but it has been subject to significant fluctuations.
• Dash is an open source peer-to-peer cryptocurrency which has taken the Bitcoin model and tried to make it a little more user-friendly by developing a decentralised governance system, adding some privacy structures and increasing transaction speed. After a slow-ish start, Dash has made significant gains in the latter half of this year: in October one Dash was valued at US$446, at the time of writing that figure has increased to US$693.

These are just five of the top players of the moment, and there are many who would take exception to the fact that Zcash, Monero, and NEM have failed to get a mention, but with more than 1,300 cryptocurrencies currently in circulation, we can’t hope to mention them all. The simple fact is that after a few years in the wilderness, cryptocurrencies are becoming big business.

Why Has the Tide Turned for Crypto?

Although there are still crypto nay-sayers aplenty, their numbers are significantly down, even on what they were six months ago. There are multiple reasons for this, but the primary one is that people are switching on to the potential that cryptocurrencies offer. They are secure; they can’t be fraudulently copied; they have various features outside of the realm of currencies, being technologies in and of themselves; and they are inherent investments, offering an ROI that would make any fiat bank manager weep.

Cryptocurrencies don’t just pose a temporary investment proposition for individuals, but could be the first step towards the cashless society, with many countries now looking into the technologies behind each of the existing cryptocurrencies, with an eye to how they could be converted for the wholesale movement of fiat into digital. It’s this that makes them so exciting.

What Are the Differences Between Fiat and Crypto Currencies?

Fiat currencies are actual, physical coins and notes; they’re what we use every day around the globe, and have been using for centuries. Their values are determined by governments, based upon supply and demand, as well as the overall economy.

Conversely, cryptocurrencies have no physical form, despite the iconic golden Bitcoin that we see on every piece of press about them. They are simply reams of non-replicable code, assigned a value by the people who use them. At the moment, that value is growing as more people are finding a use for cryptocurrencies and other crypto assets. Although cryptocurrencies are not presently regulated by mainstream financial systems, that may well change in due course, and if it does it will bring a whole new layer of credence to the crypto proposition.

Who’s Investing in Cryptocurrencies?

At the moment, crypto investment is in the domain of relatively few investors, compared to the traditional savings and investments pathways. However, more and more people are coming on board. To begin with, cryptocurrencies were only embraced by the technical few — although, being fair, that was their purpose — but now investors can be found in all walks of life, from high school drop-outs who became a Bitcoin millionaires, to pensioners looking for a way to make their savings work.

The majority of crypto investors are still millennials, but only because they got there first… Largely because it’s their generation who were paying attention when the movement began, and looking for ways to avoid reliance on the bankers who had let their parent’s down so badly. But, as more and more people turn to crypto assets, it becomes more and more likely that they’ll become an established part of everyone’s financial vernacular.

What Does the Future Hold for Crypto?

For cryptocurrencies to become a fully integrated part of the global financial ecosystem, two things will need to happen. The first is the acceptance by business, the second is the acceptance by the consumer.

With ICOs (initial coin offerings) already being used as a fundraising exercise by a growing number of businesses worldwide, the first part is already underway. SMBs, SMEs and startups which have been struggling to gain capital through traditional means since the global economic downturn, have been turning to their peers and essentially crowdsourcing the money they need. In return, the investors have the potential to gain a considerable amount of interest — should the venture prove a success. Of course, there are risks involved, but if you research carefully and find an established business to put your investment into, then those risks are minimal.

The FastInvest ICO, has been created in order to add new products to the successful P2P lending investment platform. The company is already profitable, boasting a healthy 8,500 regular customers, but the ICO will allow further developments, including the opening of a new American office and the launch of a P2P lending app and a cryptocurrency payment card.

As for getting consumers on board, it’s all about accessibility. Payment cards, like the one being launched by FastInvest, will be one of the ways that see cryptocurrencies being accepted by the consumer. For the most part, all consumers want is to be able to quickly and easily access their assets; cryptocurrency payment cards will enable them to do just that, with no more fuss than it takes to use a credit or debit card. While some online retailers have begun to accept certain cryptocurrencies — largely Bitcoin and Litecoin — it will take a complete overhaul of the retail system to facilitate the acceptance of cryptocurrencies on the high street. The crypto payment card is the shorter cut through that process.

While not every cryptocurrency on the market is going to become a booming success — shock-horror, neither is every business out there — there is more to the movement than the simple making of money. Cryptocurrencies are not fail-safe, but if the global financial crisis has taught us nothing else, it’s that neither are the established financial institutions. Crypto provides a new way ahead.