Illustration by Elena Griedel
New technology is invading every nook and cranny of our lives. In almost every industry, new technology is allowing us to operate more efficiently and more electronically. Currently, there is $1.2 trillion in circulation. While it is very easy to imagine a future world where paper money is obsolete, that requires other methods of paying for things. For many years, there were only credit, debit, and gift cards. Recently, cryptocurrency has experienced a meteoric rise in popularity.
Unlike other forms of currency, cryptocurrency is digital and operates independently of a central bank. Bitcoin, ethereum, ripple, and monero are some of the more well known forms.
One of the reasons cryptocurrencies have become so popular is that they are gaining value at rates far exceeding any other kind of investment. For example, on February 1, 2017, you could buy one ethereum for about eleven dollars. Now on that same day a year later, one ethereum costs more than a thousand dollars. That means its value has increased exponentially. The rise has been caused by many factors, some of which will wear off and decrease its value while others are going to make cryptocurrencies the way of the future.
One reason for the popularity of cryptocurrencies is that they can be bought in small portions. Students at Berkeley High School (BHS), or anyone who cannot afford full stocks, can now enter the investment market. With easy to use apps, it spends only small sums of money. It becomes a low risk way of increasing one’s wealth. Cryptocurrencies are also unique because of the buzz they have created. Article after article is being written and this all contributes to people buying cryptocurrency and increasing its value.
However, cryptocurrencies are far from perfect and their long term success is not certain. The volatility of many of these currencies make them extremely risky short term investments. Many BHS students may enjoy the fact that they can make money quickly, but it goes both ways. In the long term, these currencies could be more sound, as more and more companies begin accepting them as forms of payment.
The craze around cryptocurrencies has led them to be extremely volatile. In the long run, once cryptocurrencies are more widely accepted, they could become not only a good investment, but a more secure and direct way of exchanging money.