The other day, trying to get my head off the war, I was playing with Google. I started typing "Why is the future behind…" and the first thing the search engine suggested, I'm assuming the most popular request, was "Why is the future behind cryptocurrency," which definitely caught my attention.
Now, with two crypto ATMs, Estevan officially got a key to the rest of the world, trading crypto coins. Many residents probably have been a part of this world for a while now, but the fact that we are getting the hardware further emphasizes the changes that have already been happening for a few years. The future that's been present for some people and some places for a while is starting to settle here as well.
So what is it that makes cryptocurrencies, which some people criticize and others invest in, so special that Conservative Party leadership candidate Pierre Poilievre is planning on making Canada the world's crypto capital – a pitch he made when campaigning in Ontario and that may find fertile ground as inflation grows.
Bitcoin – the first, most established and most expensive cryptocurrency today – was invented in 2008 and introduced in 2009. On a historical scale, the path made by this crypto coin, which resulted in the development of thousands of other digital currencies, is fascinating and also unbelievably fast.
It's been just over 10 years, but digital currencies are competing with centuries-old monetary establishments.
For three years in a row bitcoin as an investment was ahead of stocks and gold. However, while many experts agree that this financial innovation will claim its spot in our global future, it's not there yet, as it's mainly used as an investment rather than a currency that allows people to easily pay for goods and services. Besides, there are a lot of critiques to overcome.
Cryptocurrencies take control away from governments and banks and decentralize the financial system we know, but they've also been criticized for their use in illegal transactions. While digital money is less affected by inflation due to its limited capacity and competitive nature, they are highly volatile. Over the years, bitcoin made it from basically nothing to almost $69,000 in November 2021 to $35,000 by January 2022.
Like other currencies, goods or services, digital money prices depend on perceived value and supply and demand. If we believe that a given digital coin is worth a specific amount of money, we'll pay it, especially if we assume that it will grow in the future. By design, as mentioned above, cryptocurrencies are limited in capacity, and the closer we get to the set limits, the higher the price goes, as long as the demand is still there or growing.
Outer circumstances such as pandemics or other transnational cataclysms may affect the value of cryptocurrencies, however, this is a globalized process rather than an inner state affair. Like other investments, digital coins' prices may also be affected by market tendencies, speculations, etc., as well as other cryptocurrencies and their perceived value. But the fact that the blockchain system gets rid of the intermediaries, complemented by an ongoing boom of cashless transactions paves the way for digital money to become a hard-money alternative.
While Poilievre's pitch may still seem pretty controversial, when circumstances are pressing, people naturally turn to systems like digital money. That happened during the convoy earlier this year when truckers couldn't get access to donations. And I see something similar happening in Russia.
Most of the Russian economy is paralyzed by sanctions that, first and foremost, are affecting people on the ground, who are watching their life savings sinking alongside the devaluating ruble. It's hard to evaluate the situation with cryptocurrencies there, as it's not public information. But the general crisis quickly resulted in the appearance of virtual groups and communities where private residents of different countries trade traditional currencies in a peer-to-peer system, sidestepping financial institutions and developing their own exchange procedures, which wouldn't be needed if digital money had been already more integrated into our lives.
One man, who's been working with cryptocurrencies for almost 10 years, explained that in his opinion digital currencies allow people to regain control over their well-being, and protect it from failure due to political elements. No matter where you are in the world, and whether your government is good or bad, people deserve to be able to live their livelihoods and shouldn't be punished for that, he said.
Blockchain technology, which is the basis of cryptocurrencies, allows for decentralization, safety, confidentiality and scalability. There is no central bank or single administrator controlling the process, and crypto money can be safely sent from user to user without any intermediaries, which will potentially allow bringing the financial system to a different level.
And with it developing as fast as it's been, I'm sure pretty soon we'll have a chance to see it in action. In the meantime, we now have a couple of bitcoin ATMs in Estevan to start exploring this still-new world.
