At the end of 2017, it looked like Bitcoin was just one step away from replacing regular money. All of a sudden this digital currency was what everyone needed. If not this one, then one of its crypto-siblings.
Seriously, what was that? Where did that come from and is it gone now? More importantly, why is there such a big controversy about it? When digging into the subject I quickly realized, that my view of it simply being digital currency was extremely naive. Interesting about cryptocurrency is not that it is digital-only-money, but its decentralized character.
As such it is an attempt to undermine the entire global monetary system. It is a direct attack on the authority of central banks and governments. Sort of rebel money, anarchistic currency, if you will.
The idea behind creating Cryptocurrency
Whoever invented the first Cryptocurrency did not have consumer-friendliness in mind. Neither did they try to make life easier for anyone by revolutionizing money. No, it was the entire world, they wanted to revolutionize. They wanted to create a better society and still do. When checking the websites of Cryptocurrencies like Ethereum for example, one finds an entire philosophy laid open.
Cryptocurrencies are based on Blockchain technology, which is a peer-to-peer network. In this type of network, there is no hierarchy and no governing power. Each participating party has equal status.
Moreover, one can practically stay anonymous – Bitcoin creators are to this day. In some types of cryptocurrencies, even the transaction history is encrypted, leaving the origin of funds unknown and untraceable, i.e. Monero.
The IOTA, on the other hand, is based on a more practical idea. Here the intention was to create a currency for the internet of things.
Why keep Cryptocurrency out of Social Media?
O.K. so I understand why governments can’t support digital currencies and some are implementing laws against it. But what is the problem the internet society seems to have with this new means of payment?
Big players, namely Google and Facebook are banning advertising, and just last week Twitter followed in line. These giants live on disruption and innovation. They are also built on a philosophy that values each individual equally and encourages free speech (at least they proclaim). So, what is their problem? Could it be similar to the governments‘ objections? After all, social networks have significant power. Do they see their authority in the web threatened?
I think there are a number of facts, which Bitcoin fathers and mothers did not take into consideration: the same reasons, why anarchistic systems never caught on anywhere.
The human greed factor involved in digital currency
Bitcoin was strong when it was practically the only well-known digital currency. The moment the crypto-wave swept over the financial market, new currencies popped up everywhere.
Today we have thousands and most are not really worth much. You can’t do anything with them. But that’s just it, in an anarchistic world, where everyone has equal power, why should I join someone else’s network or Blockchain, if I can create my own and gain more?
That’s exactly what nerdy scammers did. They launched ICOs (Initial Coin Offerings), pumped the price of their newly invented currency high and then sold their coins with a great profit. It’s called „pump and dump“. Smaller investors, who wanted to ride the wave are left hanging. In some cases currencies simply dissapeared and so did wallets full of crypto-coins.
There are humans behind the currencies and they are greedy and selfish. Well, not everybody, but there always are some, who try to outsmart the system, gain more for themselves or grab power. This, of course, at the expense of everybody else. There will always be someone spitting on equality, who takes advantage and exploits the situation.
Same with the Cryptocurrency market. Who is going to protect a currency, if no one feels responsible for it? And who is going to protect the investors from scammers?
Social Media put Cryptocurrencies on diet
The big social media channels quickly realized, where this crypto-craze would lead: The average person giving good money for new digital money and loosing, while few entrepreneurs fatten their wallets. Every day new Coins are born and people are promised the stars. As if it was the Jesus of Cryptocurrencies and bring salvation. Others offer all kinds of trading and investing possibilities, mostly gambling in disguise.
In a way Google, Facebook etc. should be thankful to the charlatans because they provided them with a very good reason to combat the potential threat before it turned into one. The advertising ban on social media helped to cool down the Lava that erupted from the crypto-volcano late in 2017.
Where do they go from here?
Now the question remains: what’s next? How will this story continue? Underneath the surface, Crypto-lava keeps bubbling intensely. For now, Bitcoin & co have taken a blow. A lot needs to change before they gain the significance their inventors and sincere investors aspire. The Blockchain technology, however, is very interesting to watch. It can bring forth a lot more than „funny money“ and I am curious to see what’s next and how Blockchain hooks up with healthcare.