Cryptocurrency has been making headlines across the world in recent months due to its innovative medium of exchange for digital or virtual currency. Digital currency has been around since the early 90s, but it has recently flourished in the wake of the FinTech revolution, with one of the most renowned digital currencies Bitcoin reaching record market levels towards the end of 2017. The market has since calmed slightly but the latest improvements in FinTech are seeing an emergence of Blockchain start-ups and increased development in infrastructure to support this growing currency network.
There are now many reasons why cryptocurrency is being used today. As Jordan Eliseo, Chief Economist at ABC Bullion, says: “At this stage, the primary use for Bitcoin and other cryptocurrencies is a speculative vehicle for wealth creation. If you get the trade right, you can make a lot of money, but it is incredibly risky and most investors are likely to lose money speculating like this.”
Timothy Dickinson is the Chief Operations Officer at Coinstop, Australia’s leading cryptocurrency hardware provider. He says: “We’ve seen the value of Fiat currencies drop in value year after year and minimal wage growth, all while our living expenses are going up. We’ve trusted the government to manage our money and it hasn’t worked. Using cryptocurrencies takes some of the power away from those trusted third parties who have mismanaged our funds for decades. Cryptocurrencies use a decentralised or distributed structure, meaning that there is no one point of failure when it comes to hacks, excluding exchanges of course. Cryptocurrency is a step in the right direction, a step toward people taking more responsibility for themselves and for their lives.”
Daria Mashenkova, Principle at Mindrock Capital, adds that the reason for cryptocurrency’s popularity is that it’s “the only financial tool that allows people to make transactions without an intermediary, which means they don’t have to pay fees. I feel that in the future, we will see several major cryptocurrencies that will replace fiat money. Now it is too early to talk about it, as the technology is not advanced yet and all the current cryptocurrencies have issues. Once the technology is mature, this replacement will become possible.”
SEMrush, an all-in-one-marketing toolkit and trusted data provider, has conducted some research into Bitconin and has found:
Over 2017, ‘Bitcoin’ search volume has increased by 1,258.21%.
- The bitcoin exchange rate correlates with the amount of search requests that have a correlation coefficient equaling 94,9%.
- In December 2017, bitcoin was searched for 17 times more often than the dollar and 101 times more often than the Euro.
- Bitcoin, Ethereum and Litecoin are most searched cryptocurrencies of 2017 Litecoin and Ripple are starting to gain more importance with Ethereum losing ground to them.
- Bitcoin, in its turn, is losing ground to the other cryptocurrencies, giving away 25% of its search volume throughout 2017 Starting in April 2017, cryptocurrency markets attracted more traffic than stock exchanges.
- As of January 2017, cryptocurrency markets had half the amount of traffic stock exchanges had, while in December 2017, things became the exact opposite.
- During 2017, cryptocurrency markets traffic has increased by 229% (with bittrex, the most popular market, traffic increasing by 1761%).
Although this currency is in its infancy, there are increasing numbers of merchants that accept it as legal tender. So what can you buy with cryptocurrency?
Using digital cash to buy goods and services
Previously cryptocurrency was only available to use for online transactions in a small segment of the market. As its reach has grown, you can spend digital cash for both online and offline purchases at select vendors. Bitcoin is most widely accepted and is recognized in several large online retailers for a range of products such as hotels, flights, apps and computer accessories. In the US, cryptocurrencies are being accepted as a form of payment similar to actual cash and plastic transactions and have also been recognized as a convertible currency for business transactions.
Amy-Rose & Abheeti Kathryn Pass from Crypto Clothesline, add: “Cryptocurrencies are being used to make purchases all over the country and according to ‘Travel by Bit’ they currently have over 50 merchants around Brisbane accepting cryptocurrencies through their cryptocurrency merchant platform. On an international level we are seeing cryptocurrencies like DASH and Ripple being used for foreign aid. Dash is funding projects in Africa, to ensure children have access to healthy food, libraries and athletics while the cryptocurrency startup “Ripple donated $29 million of its own digital currency XRP to fund public schools”.
Nathan Smale Chief Operating Officer at Intimate, says: “We are just starting to see some industries lead the way in market adoption. These industries include legal cannabis, gambling and our industry, adult. The reason that these industries are leading the way is that they typically have difficulties with traditional banking (due to a longstanding institutional bias) and there is a huge consumer demand for transactions that don’t appear on bank statements – which crypto does exceptionally well. By focussing on a specific industry, we are able to partner with existing businesses to enable their customer base to adopt intimate.io as their preferred payment option.”
Cryptocurrency in the travel and tourism industry
Bitcoin and similar digital currencies are used in a wide range of sectors, and travel and tourism is no exception. Several currencies have emerged that allow traditional style transactions for booking travel, while other services include sharing data and information among providers. The diversity in travel cryptocurrency is offering a different way to complete transactions with some merchants providing local and global discounts to members of the network.
Ways you can use cryptocurrency on your next vacation
With the growing number of merchants accepting digital cash as a method of payment, using this form of currency can help you buy products and services before and after your vacation. Platforms such as aBitSky accept Bitcoin to purchase plane tickets, and with the rise in the sharing economy, sites such as Destina let you reserve accommodation for your next break. Other areas where you spend cryptocurrency on your vacation include services such as car rental with some websites linking you to vendors that accept this form of currency as payment.
What’s the future of digital currency?
Jeremy Britton from 24 Hour Wealth Coach says: “Back in the day” the vast majority of trades for goods and services were based in trading *other* goods or services. For example, Fiat currency was created to make barter easier for trading and for transportation. It was easier to carry a few gold coins, rather than herding quantities of cattle! Over time, paper currency also replaced large amounts of gold; again, this was for ease of transportation.
“Seeing as cryptocurrency is completely weightless and borderless, it is easy to see how it will ultimately replace the paper-based cash system. However, I feel that this will take a few years, as human psychology has to reach its “tipping point”. With recent advances in technology, we have seen how the internet and email has basically replaced traditional industries, such as TV, billboards, post office letters, DVD’s and phone calls, within a couple of decades. It may take another 10-20 years for cryptocurrency to be the first choice for many, but on the way to mass adoption, many millionaires will be created from the early-adopters of this new technology.”
As for the healthcare industry TimiChain Blockchain “provides an impenetrable, decentralized method of storing health information bringing peace-of-mind to a healthcare eco-system continually under threat of attack,” said Joyce Lignell, head of the advisory board. She goes on to state that “We’re ramping up pilot programs and its go to market strategy very quickly,”
Zhi Xu, Director at X Plan Business Development adds: “The US Dollar could hardly be called a global currency when it was invented; gold was. Gold is shiny, easy to decorate things, perfect to use in industries, hard to find, and most of all, it is irreplaceable. However, it is also heavy, hard to trade in large quantities. Then, US dollar became its representative due to the power behind it.
History repeats itself all the time, and now is a turning point for cyptocurrencies. There are far too many kinds, and conflicts are necessary to determine which one represents all value. Secondly, they must be legalised to be acknowledged by everyone. There are countries admitting Bitcoin’s lawful position, but currently it’s not enough.”
It’s difficult to predict the future of cryptocurrency as the market has seen some significant fluctuations since its peak at the end of 2017. It is, however, a method of monetary exchange that is being more readily adopted by larger organizations that are looking to make all methods of transactions more accessible to its consumers. There is still some way to go before it becomes a widely used form of currency but with the innovations in FinTech advancing at a fast pace, it may eventually become the new norm in the future.
George Hartley, CEO and Co-Founder of Sendy, says: “While I don’t think any cryptocurrency will be used as a major currency in the next 1-2 years, there is a high potential for digital currencies to be widely used throughout the world at some point in the future. However, in order for that to happen, the community needs to solve a few glaring problems currently affecting crypto.
“One of these problems is transaction times. At current throughput, Bitcoin has capacity for 3-7 transactions per second, compared to an average of 2000 transactions per second on Visa or MasterCard. New developments and projects such as Segwit and the Lightning Network should have positive impact when it comes to improving transaction times and increasing adoption of the currency.”
Will cryptos become the primary currency in use? If so why, and how long will it take?
Nathan Birch, founder of binvested and successful investor debated: “This may or may not happen. I feel that there will be a demise of the dollar over the next decade which will inevitably leave the dollar to die and be hyperinflated. This may leave the governments and central banks to replace with a new dollar or a digital dollar which will be bad if centrally controlled. I see crypto being an alternative for this and a trusted source which won’t be able to be manipulated and controlled and if the network effect becomes larger and greater than what it is currently it quiet will be used as the go to currencyy for the people. I certainly feel it’s still in its infancy phases right now.”
Thomas Alford, Co-Founder of TotalCrypto, says: “The truth is that cryptocurrency could become the primary currency of the world, if it were used exclusively in the global derivatives markets. Examples of derivatives include forward contracts, futures contracts, options, swaps, warrants. New cryptocurrency projects, such as Wanchain, are building a new distribution structure for digital assets. The Wanchain platform helps with digitalising financial assets such as derivatives and provides a framework for these to be distributed or traded amongst financial institutions.
“Wanchain allows institutions to enjoy the benefits of blockchain technology. This includes security of data, increased transparency and an audit trail. All this data can be stored on either private, consortium or public blockchains. The problem with blockchains is that data and information is stored on a specific blockchain and data or inform ation cannot easily be shared or interact with data on another blockchain. You can think of Wanchain as a bridge that enables digital financial assets to move between different blockchains.
“If Wanchain is adopted at scale for derivatives trading, then yes it would become the primary currency in the world due to the size of this market. In terms of how long it would take, it all depends on how fast the world’s regulators approve such a system and how quickly it is adopted. Both regulators and large companies move slowly, so it would not be surprising if we are looking at a 3 to 5 year timeframe for mass adoption of systems like Wanchain.”
Fred Schebesta, CEO and Co-founder of HiveEx.com, is a global business leader in the cryptocurrency industry, starting several successful crypto businesses, including HiveEx.com. Fred is a big believer in cryptocurrency as the future of banking. He says: “Adoption isn’t wide enough for cryptocurrency to overtake fiat currencies just yet, but we will start to see incredible growth over the next three years as there are more ways to use cryptocurrency for everyday transactions. Technology adoption is getting exponentially faster. And a lot of people don’t want to carry cash around and want to go from one country to another without changing money. Once we see more ways people can access and us e cryptocurrency, adoption will be fast.”
However, Aidan Campbell from Taylor Wells doesn’t agree that cryptocurrency will become the primary form of currency in use. He says: “It may be controversial, but I do not see cryptocurrencies being big in the future for a few reasons. Firstly, It’s open to a lot of failures; there’s so many coins, and likely, many will fail before one takes over. The failures will burn people. Secondly, the electricity and energy required in mining seems to be out of control, and is not scalable.
“Additionally, there are question marks over how secure and private it really is. Invisible people are not really giving me confidence.”
Alex Hargrove, J.D., Chief Technical Officer at NetLaw, also points out the issue of volatility with cryprocurrencies. He says: “An investment in one cryptocurrency is not an investment in all cryptocurrencies. Hype, of course, plays the predominant role, along with government action or inaction and the markets generally, in the daily fluctuations seen from one crypto to another. The underlying blockchain technology, and how a given crypto solves problems like throughput determines what I would call it’s “substantive value.” You then have to look at substantive value, similar to a companies financials and P/L statement to determine market cap over earnings, in the context of the global economy, global politics, and media stories. Big bank comes out and blasts SegWit, that’s going to cause a drop in price, all other things being equal. Accordingly, hype plays a considerable role, as does politics and the actions of private companies and individuals, but ultimately there is a value layer built in that represents the “substantive value” of blockchain as implemented in the framework of one crypto’s framework or another. Determining what that “substantive value” represents as a fraction of the whole though is beyond the scope of this response and certainly not an easy task. Surely plenty of others have written at length on the topic so I”ll end with that brief commentary.
With much debate around cryptocurrency, Abheeti & Amy-Rose from Crypto and Kids have brought attention to the importance of providing cryto education for kids. As they explain: “Financial intelligence is not something many of us learned from our parents, as most of us are part of the 93% of people caught in the mouse-trap of debt and overspending. Something linguist and philosopher Noam Chomsky refers to as social engineering: the efforts governments, the media and private groups employ to influence particular attitudes and behaviours of a given slice of the population – ie. Influencing spending habits of most people like us, so that we generally end up flailing in bad debt like credit card overspending and mortgages we can’t afford…
“Children are our future and they need to have an opportunity to understand what money is and where its future lies. As technology develops digital currency is becoming more common with cryptocurrency being the next step. Crypto and Kids is a learning resource conducted as a public or classroom event where children learn the history of money, what cryptocurrency is and how it works on Blockchain technology. It’s a hands-on, experiential, discovery-based approach to learning about cryptocurrencies and Blockchain technology, and it’s fun. In the context of real games, kids get to decrypt a series of codes thereby earning one block on the Blockchain. Knowledge continues to grow from that foundation.”