Everyday you hear more and more about Bitcoin, Ethereum and the growing number of cryptocurrencies. As the gains and losses in this cyber money ebb-and-flow, prepare to have it permeate throughout our daily lives in heavy doses going forward. That being said, what does the future hold for cryptocurrency? Well, in a nutshell, and again this is merely my speculation from the information accumulated, the future is not a positive one. Try not to be swayed by the ads, news, and media hype surrounding how cryptocurrency will make you a millionaire overnight, and look deeply at the underlying trajectory this new money system seemingly is on. As you read this article I hope to unveil the origins, the direction, and some speculation for the future of what new, and even old, investors may witness in the digital money phenomena sweeping the world.
The first known incarnation of cryptocurrency proves a two-fold history. During the period of the 1980s to the Dot.com boom of the 1990s, the United States Federal Government, under the direction of the Treasury and National Security, was formulating a monetary system that could be traceable and easily identifiable to prevent money laundering and monitor any criminal enterprise activity. As a thorough implementation of this would require a full public money standard transition, the project was delayed until a proper transition could be coordinated. Fast forward to 2008, when one of the worst economic meltdowns in American history took place, requiring a bailout of the banks, a multitude of established retailers shutting their doors and filing for bankruptcy, and the populous’ confidence in our economic system diminished in the blink of an eye. Shortly after, in 2009, either a person or group of people known as “Satoshi Nakamoto”, brought Bitcoin and the digital currency space to the public. Due to the recent economic catastrophe, Bitcoin was lauded as a “savior”, and a way to “…keep wealth and money outside of the system…”. Though the initial patronage was minute, public intrigue for Bitcoin and the rise of other digital currencies began. Based on blockchain technology (I will leave a link for explaining this), and the execution of smart contracts (implementing its value similar to the stock market), Bitcoin was born. The principle of this “wealth storage” occurs in how everyone is able to participate in purchasing (with accepted fiat currencies), mining, or trading digital coins, so aptly called bitcoins. These obtained coins can be stored within a “digital wallet” for future usage or exchanges. As cryptocurrencies quickly become acceptable legal tender in several retailers and countries, its usage grows for the purchase of goods and services. Additionally, similar to a stock market or financial portfolio, these digital wallets store your available coins, which may incur gains, based on the speculation, trading, and increases in the given currency. But, much like the stock market, volatility is present as these currencies experience highs-and-lows in valuation. This is evident in the recent spikes and crashes of several cryptocurrencies, so for all currently or looking to invest, please proceed with caution and continued education.
Now, in order to understand the direction of cryptocurrency, I believe a brief history lesson is necessary so we understand the comparable and the similarities in past events, and from there we can predict the underlying purpose of digital currency. The year is 1921, and America is slowly pulling itself out of one the worst economic recessions in its young history. Several economists blame the recession, and sharp decline in the value of the U.S. Dollar, on many factors inclusive of re-integration of soldiers returning from World War I, a sharp turn in economic and fiscal laws passed by the Federal Government, and a prevailing shift away from an agrarian society. During the fourteen month period from January 1920 to July 1921, money was nearly valueless and thousands of Americans found themselves out of work. Within a matter of months, the economic tides shifted, and businesses began their slow climbs back to relevance. Faith in the American economic system, however, reached an all-time low and the population was afraid another, more catastrophic downturn could be on the horizon. But the American government and the up-and-coming banking system encouraged the people the “Roaring ‘20s” were here to stay, and investment in the stock market institution was a means in achieving great wealth and the “American Dream” of rags-to-riches. So, as the appearance of wealth remained for the much of 1920s, people were riding the highs of the stock market, as patronage reached an apex in 1927. Fast forward to late 1929, as worldwide panic in European markets rose, over speculation was rampant, and the threat of another world war was prevalent, when the global system showed signs of crumbling. In October of 1929, the day of infamy known as “Black Tuesday” hit the stock market and American population alike, and hit them hard, as fortunes were lost overnight. The effects of that day would linger for nearly two decades as speculation in the overvalued stock market had reached its tipping point. As the smoke cleared, multiple investors, bankers, and business giants, both foreign and domestic, were jailed for fraud and forgery. Investigation and reviews concluded global stock markets continued their meteoric rise because of manipulation, insider trading and buying, and heavy reliance on public investment to prop the systems up, resulting in large companies and investors making millions, while the working class lost almost everything. The same comparables can be seen with our current state of affairs. For all intents-and-purposes, 2008 can be seen as a period of monetary fear as a deep recession hit the world. Truth be told, it was more than that, as in my humble opinion, the economy we once knew perished that year, and has merely been held together by government policy, and a few smoke and mirror tricks by the banks. Much like the stock market of the 20s, cryptocurrency has come along as a method for the people to “…operate outside of the system…” and achieve wealth. However, similar to those Roaring 20s, we currently are experiencing the highs, but I feel the impending doom for the digital money looms around the corner, and much like before, several who have invested will be left with significant losses after investing their hard earned money. Furthermore, in the near future, I fear those currently investing in digital currency may find a version of it is the currency of the future, but only after large sums in wealth are lost. But we will delve more into that.
So what is the future for cryptocurrency? Ain’t that the million dollar question! Predicated on research and obtained information, my belief is cryptocurrency/digital currency is here to stay…but not in a good way! If you have not already heard, China, Russia, India, and even America, just to name a few, are countries heavily invested in creating a digital currency as the new money standard for their respective territories. For Americans, the idea of the dollar being abolished and the possibility of the FedCoin remains as a distinct reality. Also, several established banks such as Bank of America, Huntington and PNC have filed several patents for digital systems to handle an entirely digitized money system, as the integration away from paper fiat money is already in the works; we the people just were not in the know. Also, I believe a major “event” is set to happen in the world of cryptocurrencies, and this event will give credence for possible intervention from the Department of Justice, or massive raids and take over of digital markets by other departments in the Federal Government, leading to extreme regulation and possible running by a current or future wing of the government. That event could be investigation into the multiple accounts of digital currency fraud we currently are told about by the news media outlets, the security agencies of the government finding that money laundering for terrorist groups are occurring, or regulation for the principle of protecting investors. Whatever it may be, I truly foresee a government takeover and/or regulation of the digital world. This argument is only strengthened by observing how the Chinese government is implementing policies to limit new IPOs and digital currencies from arising, possibly paving the way to unveil the digital Yuan or the proposed ACYuan, as the new currency of the country. Venezuela is another example of what might happen, as after nearly three years of the people suffering in abject poverty and starvation, the country’s leadership will attempt to institute a new digital money system, and abolish the current Bolivar paper money. But delving even deeper to fully understand what may be the true intent, governments of the world have informed us numerous times it promotes advancements in the private sector, with the hopes of integrating that progress within the constructs of the central government at later points when all the bugs are worked out, and the people are more accepting. So why would this be any different? One might say all the cryptocurrencies in place right now are merely the testing grounds before a takeover or later role out of government-backed digital currencies throughout the world.
But one more paramount reason for my bleak outlook on digital currency is the mere fact that wealth and ownership are not realities, but simple concepts we cling to. Before the pitchforks come out, please hear me out and truly contemplate on the validity of my point. Less than 5% of the American population has achieved financial success over $250,000 in savings by gathered statistics. Let that sink in, less than 5%, and that number drops substantially the higher up the monetary pyramid you get. We all have the freedom to chase wealth, but there are things in place which make it difficult to achieve. During the stock market boom of the 1920s, only a small percentage actually obtained financial gains from playing the market, but many lost nearly everything. I foresee the same in this stock market of today, as millions will invest large sums, but only a handful will achieve any significant gains. I hate to be the burden of bad news, but this is how so many of the pillars in the economy go; get the publics money and run! The truth remains that wealth, and even ownership for that matter, are principles and ideals. Do you own your home? Your car? Some of you may have answered “yes” because you paid off the debts on these possessions, but you truly don’t own them. For those that paid off your mortgage or purchased your house with cash, you only have a Warranty Deed, and a warranty deed only gives you a claim in ownership. If you don’t pay your taxes for any length of time, you will see just how quickly your ownership is stripped, and that house becomes property of the state or a bank. Same is true for your car as well. Should you fail to keep your registration current, or drive without insurance, your prized possession will quickly becomes property to someone else, or a nice ornament for your driveway. Honestly, we as people don’t have wealth and surely don’t have ownership, but millions of us do have debt. Being truthful, economists tell us to have debt and take on more debts, as that is what our global economic system is based on. So how can you have any wealth if all you are encouraged to do is take on debt? Will investing in cryptocurrenies change that? Well, that is why so many people have flocked to cryptocurrency, as they see it as a means to ride the highs and obtain wealth. I hate to burst the bubble, but the system was not designed for that. It was however, designed to get you into this new system, giving your consent as we usher in a completely digital age. And in that digital age, all of your money will be in the system, although current claims are to the contrary, and in that new system, your money will be managed for you. It would not shock me at all, as paper money becomes the way of the dinosaur, that the new digital money is regulated to encourage spending and further matriculate our debt based society. Once your money is digital, interest rates could go negative, meaning money in the bank or digital wallet would actually cost you. Smart contracts and pre-payment for goods and services could be the norm for this future. This attack on principal wealth would make anyone incur more debt in order to preserve whatever buying potential they have and acquire goods before the loss of funds occurs. Remember, all these cryptocurrecnies are predicated on technology, and the current technology can be easily accessed and manipulated by anyone with the knowledge of how to manipulate those technologically-based system; so I ask, how are cryptos outside the system? The undeniable truth remains it truly is the new system. Again, I’m not one to say it is a pointless endeavor, but do not make the mistake many made back in the 1920s.
It was once said that in order to understand where we are going, we must understand where we have been. I believe no truer words have been spoken, that could be related to the past, current and future of cryptocurrency. Though MY, and I emphasize that, outlook is a bleak one, it is one we must discuss, in order to get a clear understanding of this new monetary enigma. Looking at past events in our history, understanding our current market system, and reviewing all the unfolding events will help paint a clear picture of the future of digital currency. Also, please remember I am not saying stay clear of this new money, far from it, but do your research before you jump in.
JA3Tech 