Crypto: Rise to Popularity

bitcoins

Let’s be honest with ourselves. Economics is a dry, dull, high repetitive study that inevitably costs those that undertake its understanding a chunk of their mortal soul. After all, there are only so many times you can read “and then this industry did the same thing during the same period of time and netted the same results requiring the same regulations” before you slowly slip into madness. Yet, its study is crucial to understanding what led to the rise and popularity of cryptocurrency.

At the core of economics is the study of money and markets. Markets function through the use of capital, aka money. Capital is an economic product designed to help facilitate trade through participating members of the system pricing their products in capital. Thus, cutting down on bartering montages while providing additional benefits that lead to our modern civilization being possible.

By itself, this is a complex arena of study with numerous differing and competing schools of thought on the interactions between capital, markets, and people. What is important is capital must have value to facilitate trade.

Capital typically is valued in what is known as a Standard. A standard is merely what good capital can be exchanged for and how much of said good can acquire. There have been various standards in the past, including the famous Chinese Rice Standard, where the currency was valued based on how much rice each denomination could be exchanged for. Modern times saw the rise of the gold and silver standards, which were both abandoned by the 1970s. Leaving currencies to be valued by demand for the currency rather than what it can be exchanged for.

Nations around the world abandoned the gold and silver standards to be capable of engaging in currency manipulation. Something they needed to be capable of in order to engage in currency wars. Unlike hot wars, currency wars are easily overlooked affairs where competing nations devalue their currency to have an economic edge over other nations in international trade and production. 

As you read this, we are currently in the third great currency war. This time the center opponents are the United States and China, with both nations attempting to position themselves financially to dominate international trade and thus extort political influence globally. As you can probably imagine, currency wars are detrimental to participant’s economies. Moreover they have a severe impact on the poor who find themselves unable to have access to the same purchasing power they used to have. The combined depreciation of the currency leading to loss of purchasing power and the uncertainty it generates drove the need for a new currency. One that could not be controlled by a central power that could devalue the currency at a whim.

You may think this is where Crypto enters the scene. It isn’t. Before cryptocurrencies, there were several attempts at implementing a digital currency utilizing various mechanisms. The more traditional attempted to utilize a silver/gold standard where the more currency purchased from the creator, the more gold/silver they would acquire, thus preserving its purchasing power.

That venture failed. Ecash protocols were another great attempt at establishing a digital currency. Utilizing a different type of protocol, Ecash was poised to be a viable digital currency alternative, but never got off the ground.

Then in 2008 Satoshi Nakamoto unveiled the blockchain protocol to the world. In essence, a blockchain is a decentralized network that monitors itself and manages itself. Bitcoin was the first cryptocurrency to utilize this technology, but it wouldn’t be long before Litecoin and Etherium would join its ranks.

Today there are numerous currencies with a few established dominant currencies. Unlike the dollar or most national currencies, these currencies are not subjected to market manipulation by centralized banks. Their value is determined by scarcity and demand as there will only ever be a certain amount of each currency and never any more.

At first, few took the rise of cryptocurrencies seriously. Over time as more people realized the currency granted anonymity and was not going away, more people adopted it increasing its value. In the beginning, these currencies grew in popularity in the dark web and among enthusiasts. Now major retailers, online stores, and celebrities accept them as a legitimate currency.

Never behind the curb, the gambling industry jumped on board the crypto revolution early. Today many online casinos operate solely on Crypto, with most remaining hybrids accepting real money and cryptocurrencies. With the market so saturated, many have to turn to lists rating crypto casinos to know which offers the best deals.

Cryptos popularity doesn’t end there. Major financial institutions now adopt and hold various cryptocurrencies. Elon Musk recently purchased a whopping $1.5 Billion in Bitcoin driving the price up, making many investors very happy in the process. In January, China https://www.warc.com/newsandopinion/news/china-moves-closer-to-launch-of-worlds-first-sovereign-digital-currency/44550  launched the second test of its state-backed cryptocurrency, which is looking at a release later this year.

Crypto’s rise to popularity will inevitably dot both literature and movies. A few decades from now, children will be taught of its rise in history class, and economics will center around it. Welcome to the age of Crypto.

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