Cryptocurrency is a digital currency secured by cryptography and recorded on a blockchain. It has no central issuer, no government backing, and no physical form. Bitcoin, launched in 2009, was the first. Ethereum, launched in 2015, added smart contracts. Today there are thousands of cryptocurrencies, with a combined market value that has ranged from $100 billion to over $3 trillion.
The technology is the point. A blockchain is a distributed ledger maintained by a network of computers. Transactions are verified by consensus, not by a bank. That makes them hard to censor or reverse. It also makes them attractive for speculation, illicit payments, and cross-border transfers. The volatility is extreme. Bitcoin has risen and fallen by 80 percent or more in a single year.
Regulation is unsettled. The United States treats Bitcoin as property for tax purposes and regulates exchanges as money services businesses. The Securities and Exchange Commission has sued several crypto firms, arguing that their tokens are unregistered securities. The European Union has adopted the Markets in Crypto-Assets regulation. China has banned trading and mining. The rules vary widely by country.
Cryptocurrency has real uses. It enables payments without banks, remittances at low cost, and programmable money. It also enables fraud, ransomware, and money laundering. The technology is neutral. The uses are not.
Comments (6)
Leave a comment