There is a fair chance that roughly two years ago you felt a sudden urge to buy cryptocurrency. You see, out of the blue everybody, from your neighbor to your fitness trainer, seemed to own money with interesting names such as Ripple and Dash, as Bitcoin obviously was for dummies. Once again, FOMO was real. As such, it was only human to invest some of your savings in these promising currencies too. Unfortunately, nobody had told you that only a few months later you would have to painfully watch your new money devalue at the speed of light. Slowly, you had to come to your senses and realize that becoming a crypto millionaire was not for you. The digital currencies seemed to have lost their value and with that the people seemed to have lost their trust. So what exactly happened? And what does the crypto future hold for us, if there is any at all? Time to zoom in.
A Brief History of Crypto
By now we all know what cryptocurrencies are, more or less, right? Put simply, cryptocurrencies represent encrypted, decentralized and virtual currencies that are being transferred on a peer-to-peer basis. All transactions are being stored in a public, blockchain ledger, which, theoretically, ensures that everything can be tracked back and that (hardly) no changes can be made to the finalized blocks.
This new form of money caused an epidemic which started 10 years ago in 2009 as Bitcoin was born. However, it was not until 2013 that Bitcoin attracted serious media and investor attention as it reached a value of $266 per Bitcoin, in April that year. It did not stop there. At its peak, one Bitcoin was worth nearly $20,000. In the years that followed, various digital currencies were on the rise as well and towards the end of 2017, cryptocurrencies were hot and happening. That changed towards early 2018. Stories about hackers were the first to create trust issues among consumers and soon the digital currencies plunged. Experts started to speculate about what exactly made the bubble burst, resulting in rumours.
For instance, it is said that the US Justice Department is investigating whether the currency Tether was used to manipulate the Bitcoin market and so caused extreme increases in Bitcoin price.
In addition, several governments and institutions were not as enthusiastic about this whole crypto thing as, let’s say, your fitness trainer. Still, some forefront governments such as Japan, China and South Korea looked into means to better regulate the crypto business. The whole world patiently waited to see if their advanced technologies would hit the mainstream and strengthen the virtual currencies. But, it did not and huge hacks followed; the hacks created massive cracks and the public’s trust sunk to far below sea level. Suddenly, people’s crypto wallets were really, really empty. Including yours.
Despite this dramatic story which probably still makes you sob, not all hope is gone. Even the most harsh critics do admit to see some form of light at the end of the tunnel. In fact, the whole crypto crisis enforced a serious boost in the innovation and development of the whole blockchain technology. Yet, speculators remain careful with their predictions of where the crypto industry is headed. What they do tend to agree on, though, is that within industries ranging from finance to artificial intelligence and from healthcare to politics, firms are going to benefit from increasingly powerful and promising applications that have blockchain at their core. Look at Facebook introducing its own currency called Libra, multinationals now accepting Bitcoin as a payment method (Starbucks, Whole Foods, Nordstrom) and governments starting to use crypto in their trade deals (as Argentina and Paraguay recently did). There is no denying that developments are taking place and that important parties are buying in. So, did people lose trust in digital currencies? Yes. Is it going to be hard for this trust to be (partially) restored? Absolutely. Are blockchain and cryptocurrency dead? No, not all at. Change is upon us.
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