Bitcoin – the first cryptocurrency

Bitcoin was first released in 2009. Intended as a decentralised alternative to fiat currencies that would make financial institutions obsolete. In the last decade Bitcoin had become a household name, but not a replacement currency. The vast majority of transactions carried out with Bitcoin are on cryptocurrency exchanges, rather than being used to buy goods and services. This has led to wild fluctuations in price. The price fluctuations make it an appealing investment for those looking for a get rich quick scheme but those same fluctuations make it less appealing as an everyday currency.

A new wave of Cryptocurrencies

Now things look set to change. Many banks and large corporations are looking to develop their own cryptocurrencies. JP Morgan Chase has announced its own JPM coin and is the first big international bank to do so. Major tech companies are also looking at creating their own currencies. Walmart in the US is developing its own ‘Walmart Coin’ that would be pegged to the dollar, avoiding large price fluctuations. Facebook has announced its own cryptocurrency, Libra. Run by a consortium of 26 companies including Facebook, Uber, and eBay. Libra is set to launch in early 2020. This has come under serious scrutiny, particularly regarding privacy rights. Facebook has recently suffered heavy fines for its user’s data being harvested by Cambridge Analytica. Amazon and Google have not yet announced their own cryptocurrencies, but many insiders expect them to do so within the next 2 years.

The future for cryptocurrencies

If retailers and tech companies release their own cryptocurrencies soon they are well placed to make a success of them. Facebook could over time only allow advertising to be paid for using Libra. This would force many small businesses to adopt the currency. A retailer such as Walmart or Amazon could gradually introduce a new currency. At first offering discounts if used to buy goods and then eventually, over the next few years, only accepting payment in their own cryptocurrency. Although there will be resistance from regulators, central banks, and financial services, cryptocurrency looks set to expand its use and reach over the next decade and become a part of our everyday lives.

Photo: bitcoin by SimpleFX licensed under Creative Commons 4.0