- The current state of cryptocurrency,
while having come a long way,
continues to have a certain Wild West feel to it.
A high number of people and organizations
have jumped in to get a piece of the action.
It's chaotic, it's risky, it's exciting,
and it's rapidly changing.
There's little doubt that the idea
of new currencies without the need for banks,
governments, and other intermediaries
is disruptive and impactful to the status quo.
This notion makes many exhilarated,
and more than a few quite uncomfortable.
Cryptocurrencies, commonly abbreviated to cryptos,
have value because we say they do.
That's the core thesis of contemporary money.
Provided we're prepared to accept it as payment,
there's a steady supply,
and that it can be a store of value,
then that's just enough to make it workable.
In the few short years
since the original crypto currency, Bitcoin, emerged,
thousands of alternative cryptocurrencies,
or alt coins, have surfaced.
People are using these alt coins to support, manage,
buy and sell all types of products and services.
Cryptos are also being used simply as investment assets.
Where for example, people to try to buy low,
hold, and then sell high.
Recently, it seems that crypto
is being increasingly viewed this way,
rather than its original intent
as a medium of exchange.
Cryptos are being used in creative ways
to raise capital, manage digital assets,
support innovative processes and businesses,
and even disrupt traditional financial institutions.
We must acknowledge, too,
that entire industry of illicit uses,
such as payment for contraband, has also emerged.
One measure of the maturity and acceptance
of cryptocurrencies into the mainstream,
are the number of traditional financial organizations
beginning to support them.
From JP Morgan, Chase, to PayPal,
Wells Fargo, and Goldman Sachs,
there's a recognition that cryptos
have become too important to ignore.
Governments are slowly grappling
with the implications of crypto.
Responses range from all out banning,
to those making crypto a national currency.
Countries including China, Bangladesh, Iraq,
and several others have implemented absolute bans.
Remarkably on the opposite end,
El Salvador became the first country
to declare Bitcoin legal tender.
In addition, a number of countries such as China,
Britain, and Sweden are experimenting
with the creation of their own crypto like currencies.
It would also come as no surprise, too,
that regulation in many countries
is being actively explored.
While Bitcoin is so often considered synonymous
with cryptocurrency, and for good reason,
it's by far the largest of the bunch,
the alt coin ecosystem has grown
to thousands in just a few years.
Ethereum is the second largest,
and a distant second in terms of market capitalization.
After Bitcoin and Ethereum,
there are thousands of alt coins,
with names such as Litecoin, Ripple, Cardano,
Polkadot, and Stellar.
Each offers a unique proposition,
some such as Ethereum, Solano and Ergo
use their cryptocurrencies
to enable compelling application platforms.
Others support cross-border payments, voting,
and digital assets.
With thousands of alt coins in circulation,
many will fail and a lot more will emerge.
Any consolidation in the crypto marketplace seems far away.
This makes it ripe for speculation,
and ultimately a high risk environment
for participation and investment.
Nevertheless, despite its high risk,
cryptos are generating significant amounts of innovation,
and attendant in industries in every part of the world.
For example, in support of rapid growth and interest,
there are a growing number of exchanges
that enable participants to buy
and sell cryptos more easily.
There's a whole new industry of developers
and service providers for applications
being built on crypto called distributed apps or dapps.
And most notably, recently many innovators
have been discussing the emergence
of the next generation of the internet, called Web3.
This would enable individuals to have an ownership stake
in internet solutions and greater power
over their personal data.
Web3, if it comes to pass,
would run on blockchain technology,
the underlying system that makes cryptos function.
Finally, the qualities that make crypto so compelling,
such as anonymity, an absence of oversight,
also provides it with the perfect use cases for criminals.
In particular, cyber criminals
have been choosing crypto to receive their ransom
for cyber crimes, appropriately named ransomware attacks.
In addition, hacking and fraud are not uncommon challenges.
Despite the high risk of cryptos today,
the potential benefits are driving
a great deal of enthusiasm.
Without a doubt, cryptos are a disruptive force.
And in the years ahead,
may, and I emphasize may here,
be an important participant in the world's economy.
Time will tell.