Cryptocurrencies, a Scam or a Dawn of New Age in Business?

In the past couple of years, economists and analysts have been giving constant notice of a possible devastating economic crisis. There is a constant feeling of instability regarding economic, social and political matters in Europe and US right now. The European project is at risk, as tensions rise among the old continent due to the migration crisis, the activity of radical parties and institutions and an unsafe banking system affected by non-performing loans. Brexit negotiations are still tense and the British pound has been dropping in value, determining shifts in currency trading and panic selling among FX players. Right now, currencies are vulnerable to manipulation by central banks, which are left only with risky possibilities of revitalizing the economy such as helicopter drops of money and the introduction of substantial negative interest rates. With all this happening, business owners and managers are searching for a way to secure at least some of their money in case of another economic meltdown.

The Rise of Cryptocurrencies

The market capitalization for cryptocurrencies has boomed recently, going from 25 billion dollars to 100 billion in just two months. Of course, this high rise can be followed by a dramatic decrease, as it has previously happened with Bitcoin in the past. That makes digital money subject to high price volatility, which however is no longer a big drawback as traditional currencies have become pretty unstable, too. Big-name companies are starting to bet on virtual money, as do the financial institutions of the world. Governments of the UK, the US and China are studying the potential of digital money with the intention of properly regulating their use. Further on, about 90 banks are already exploring the possibilities of cryptocurrency’s core technology: the blockchain. So if powerful enterprises and official institutions are taking digital money seriously, so should everybody else working in the business sector.

What are cryptocurrencies?

For those who are not initiated in the mysteries of Bitcoins and altcoins, here is some important information:

  • Bitcoin was the first successful attempt of creating a virtual currency system and it was launched in 2008;
  • Bitcoin is based on a decentralized peer-to-peer system, called the blockchain;
  • Transactions of Bitcoin are encrypted code pieces, recorded in a public ledger and every operation updates the entire database;
  • Since 2008, over 700 other virtual coins have flooded the market, some based on similar technology, others featuring a centralized system;
  • Businesses usually opt for Ethereum, which offers high security and the possibility of Smart Contracts (agreements turned into lines of code) or Ripple which enables real-time payments, unlike other altcoins.

The Advantages and Risks of Cryptocurrencies

Those who advise against digital money highlight the extreme shifts of their value, the slow transaction time, the association with the black internet and illegal affairs and the risks of theft through hacking.  But these arguments have lost their power in the light of recent events. Traditional currency is also very vulnerable in the context of global political turmoil. Governments, reputed companies, and institutions allow the use of cryptocurrencies, so using Bitcoins or another form of virtual cash does not raise suspicions anymore. Moreover, all forms of currency are facing the perils of hacking: even individual users operate many transactions digitally. Slow processing is a problem when it comes to Bitcoin, but there are other faster alternatives among the 700 types of coins. And for those living in poor or war-torn countries, cryptocurrencies allow them access to money and services even if the public financial system crashes.

How to Invest in Cryptocurrencies

There are two possibilities to start investing in virtual currencies. The simple one is to access a platform like Coinbase and start a typical buying process. Credit and debit cards, as well as bank transfers, are allowed. Though the digital money system praises privacy, for big transactions you will have to go through an identity verification.

The other option is to take part in initial coin offerings which happen on token markets. ICOs give start-ups the opportunity to issue a customized token that can be bought by investors with cryptocurrency. Entrepreneurs have the possibility to test this market by investing small amounts that they can afford to lose.

Though still considered controversial, cryptocurrencies are the expected result of how the economy works in a progressively digitalized world. And in the not-so-distant future, they might very well change the design of financial systems, as well as minimize the power of the governments over the world economy.


Phil Piletic
Phil Piletic
PHILIP Piletic's primary focus is a fusion of technology, small business and marketing. He's a freelancer, writer and traveler who loves to share his experience with others by contributing to several blogs and helping others achieve success.

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