In our Spring 2021 issue, we decided to take a look at cryptocurrency: a topic that is much-discussed in alternative living communities. Could it be the beginning of a financial revolution?
Cresting the Crypto Wave
Is cash still king?
by Aisling Cronin
Change is the buzz word of the moment. Our world is in flux and many traditional systems are being re-examined. For many, the financial system is at the top of that list. Cryptocurrencies have been garnering a lot of attention in alternative living communities. Chances are, you have heard of some famous ones: Bitcoin, Etherum and XRP are a few of the best-known crypto offerings on the market, each with their own pros and cons.
In keeping with the theme of this issue – imagination – we decided to take a closer look.
Let’s start with the basics: what is cryptocurrency? And what differentiates this kind of currency from the money we use in everyday life?
Fiat money (euro, pounds, dollars, yen, etc.) is a term used to describe government-issued currency that has been designated as legal tender in its country of origin. It is not backed by any particular commodity (such as gold or silver) – as many world currencies were in the past – but derives its value from broad market use: i.e., the collective actions of those who exchange fiat currency decide how much it is worth at any given time. Fiat money can be issued in the form of coins and notes, as well as existing in a digital form. This is the type of money we use every day.
Cryptocurrencies, on the other hand, typically do not exist in physical form (like paper money) and are not issued by a central authority. They use decentralised systems of control, as opposed to centralised fiat banking systems. Individual cryptocurrency ownership records are stored in a computerised database, using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
One major plus point of cryptocurrency, in the eyes of many users, is its transparency.
While individual users of cryptocurrency remain anonymous, the transactions themselves are all stored on an open ledger (the blockchain). This means that the data is available to view by anyone at any time, which appeals to those who want a more transparent banking system. Cryptocurrency’s anonymity has won the favour of those who value their online privacy, and are wary of handing over too much digital data.
One obstacle that has prevented cryptocurrencies from being universally adopted is that they are not yet well understood. The concept of a decentralised financial system, stored via blockchain, can be challenging to people who aren’t tech-savvy. At the moment, cryptocurrencies are not broadly used in everyday transactions. Most holders of these currencies are treating them as investments: waiting for the market fluctuations to work in their favour, and seeking the most opportune moments to buy and sell their coins.
Cryptocurrencies are not bound by customs adjustments, centralised regulations, or fluctuating political changes (as fiat currencies are), so market trends can be unpredictable. However, crypto lovers hope that as awareness grows, these currencies will be more commonly used in everyday transactions. Every budding technology initially faces a degree of uncertainty and resistance, and cryptocurrency is no different.
Could the crypto revolution be underway?
This remains to be seen, but it certainly has the potential to inspire greater transparency in the way we do business. In years to come, we may well be able to point to the advent of cryptocurrency as a key development that reimagined the financial world as we knew it. If you are thinking of investing in cryptocurrency, make sure that you do your research, seek expert advice, and go with the currency that feels best for you.