An old piece I wrote on cryptocurrency
Digital currencies and what they could mean for the world.
By Ra’Chaun Rogers.
Most Americans are not economists, and when the country’s economy took a nose dive, a majority of citizens decided on a few things one of them being that banks were evil. They control the exchange of money, as well as the livelihood of a lot of people and are not only capable of questionable actions, but in some cases pardoned for it by the government. What if the control and flow of money were put into the hands of people and what if that money increased in value over time? Well nowadays there is something called digital currency which has the potential to change the way we see finance.
In 2009 a man (or group of people) using the pseudonym Satoshi Nakamoto developed the first digital currency known as “Bitcoin”, which among other things is beholden to no bank or government, but is monitored by a large group of individuals on a network known as “miners”. Most forms of digital currency were linked to the price of precious metal currency, making them fixed, but most have since then changed and now fluctuate. The great thing about digital currency is that they cannot be controlled by any government, organization or sole person. The security of digital currency is also not a factor as the number of miners is so great that in order to tamper with the network a person would need a computing power higher than that of a large software company. Digital currency is perfect for transportation of currency out of countries that are subject to Capitol Control, since there is no red tape to go through. The downside of digital currency is that if used on a wide scale certain deflationary digital currencies could lead to people hoarding money with the intention of making purchases at some undisclosed time when it’s worth a lot more than originally stated. Another issue is that people can choose not to accept digital currency for transactions, thus making them useless. The biggest problem with digital currency is that it fluctuates at such an unpredictable rate that it would be hard to use it as a mainstay currency for many transactions. While it seems to be the emerging currency of choice to those in the Occupy crowd or by people living in countries that can’t transport large sums of money to other countries, its relative newness, and somewhat underground status doesn’t make it a likely candidate for replacing any form of physical currency.
In my opinion, digital currency is an interesting way to put the power back in the hands of people. The miners who operate and maintain the networks are regular people, which in theory is a heartening idea. However, a new problem arises when you switch your mode of exchange from one based on a hard to understand fiat system to one based on an equally hard to understand computer science system. The average person probably knows less about open source code than they do about interest rates. It would also probably require a lot of getting used to and maybe even some specialized instruction for normal citizens to understand. Of course, this is speculating that digital currency becomes a widespread and accepted medium of exchange, until then it will only be a novelty.