For the average global citizen, the overall understanding about cryptocurrencies falls somewhere between knowing the text of the Egyptian Book of the Dead and the best recipe for Ilocano papaitan.
For the ignorant, the Book of the Dead is a number of magic spells to assist a dead person’s journey into the afterlife. Papaitan is a notable dish from the northern Philippines made from goat or beef innards such as tripe, liver, kidney, intestine, pancreas and heart. Don’t you feel smarter already?
Likewise, on the list of life’s priorities, cryptocurrencies are somewhere between avoiding being one of the six people globally killed each year by unprovoked shark attacks and preparing for the 2100 New Year’s celebration.
An assessment of cryptocurrencies runs from “Bitcoin is a combination of a bubble, a Ponzi scheme and an environmental disaster.” That was made by Agustín Carstens, the former Mexican secretary of finance, deputy managing director of the International Monetary Fund and currently general manager of the Bank for International Settlements.
However, cryptocurrencies like Bitcoin have serious supporters, and not just like those who got into them at the beginning at a double-digit price. International Monetary Fund Managing Director Christine Lagarde has urged central banks to look into issuing digital currencies particularly for those in countries with bad economies.
The name says it all. “Currency” is a storage of wealth and a medium of exchange. “Crypto” means secret. When you use your credit card, which is usually electronic, everyone—buyer, seller and third- party facilitator like a bank—knows everybody else. That is why, if you buy the “unedited” video of Alice in Wonderland, you might be billed by a company called “Children Fairyland Stories” instead of “Raw Porno Productions.”
The secrecy and the ability to make anonymous money transfers is why the first cryptocurrency was “invented” in 1983 in a research paper by a 28-year-old PhD student in computer science at the University of Berkeley, California. Dr. David Chaum went on to establish “DigiCash Inc.,” and the first electronic payment was sent in 1994.
Chaum’s “crypto” worked exactly the same way as Bitcoin with a completely secret and blind digital signature just like with a Bitcoin wallet and key. So promising was the idea that the Dutch ING Bank wanted to buy into the company and Bill Gates wanted to integrate DigiCash into every Windows 95 installation, willing to pay Chaum $100 million.
Chaum was extremely secretive—just like his idea—and refused to let anyone know his source code unlike the open source that allows anyone with a few hundred thousand bucks to create their own crypto today. The major difference is that Bitcoin uses the blockchain technology, which makes it a bit easier to do the transaction, but the crypto and security is nearly the same as that of the 1994 DigiCash.
Nonetheless, DigiCash suffered from the same problem that Bitcoin and the other 1,658 cryptocurrencies (as of March 16, 2018) currently have. It may be crypto, but it is not currency.
My (and your) pesos, dollars, yen and Botswana pula can be exchanged for pork, t-shirts and even a “Ladies Drink” in the country of issue. As of now, cryptos can only—for all intents and purposes—be exchanged for pesos, dollars, yen and pulas.
Until that changes, and knowing it is not going to happen anytime soon, cryptos are a nice highly speculative investment that may or may not make a profit. Maybe part of the excitement of cryptos comes from knowing your crypto wealth might be part of the nearly $1 billion stolen by computer hackers in 2018.
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1 comment
Thankfully, technology is constantly evolving and crypto is being accepted in more and more places, just as the other regular currencies. A good example is the 3-Day Japan Bitcoin Cash Survival Challenge, in which Akane Yokoo proved, that it is quite possible to survive using only crypto. The whole thing depends on the country you’re in of course, but it’s good to see the first steps of the adoption. Curious to see how far it will go.