By Justin Agrell
It’s hard to ignore the presence of cryptocurrency these days. About 30 years ago, cryptocurrency was really only discussed in cryptography circles and by those working on the conundrum of taking payments over the internet. Now it’s everywhere. People with little to no knowledge of technology are getting involved simply as a means of investment.
So what does this mean for you?
Cryptocurrency is simply a modern evolution of money. From seashells to rare metals, money has always taken effort to collect and distribute. The most important aspect of money, however, is faith. For any object to be considered a currency, it takes the belief of a community that the object is actually reliably traded for goods and services. This is especially true with our modern fiat currencies which have evolved from notes that were backed by resources such as gold. This fiat system has worked for some time without any issue simply because of our faith. Cryptocurrency further evolves money by using advanced technology to verify its transactions and distribution, removing the need for banks and reserves for management and decreasing the abuses of market manipulation. The currency not being tied to any singular government or country helps keep taxation and regulation away. This makes cryptocurrency attractive to many — including those who enjoy equal trade across all borders, and criminals trying to remain anonymous.
There are a few terms that are important to understand when discussing cryptocurrency. The most important is “blockchain.” A blockchain is just a ledger, i.e., a record of financial transactions. In most popular cryptocurrencies, the ledger is spread across many different computers, called nodes, allowing resilience by removing the possibility of a single server crash taking down an entire currency. “Mining” for currency means simply verifying the integrity of the blockchain. You use your computer to verify the ledger and then they pay you back in their respective currency. It’s up to an exchange to decide whether or not the currency you have mined has enough social trust to be worthy of trading. If the exchanges refuse cryptocurrency, then there’s no longer a market for investors.
So, should you invest in cryptocurrency? What about cryptocurrency-mining computers? The answer to that is simple. Are you an investor? Cryptocurrency is not a get-rich-quick scheme. It’s just money. You can earn or lose just as much trading in dollars from Canada or any other country as you can in Bitcoin and other alt-coins. As far as mining goes the same applies. There is a large risk in changing your specialization. If you are not good with computers and do not understand technology then investing in computers and technology is going to be very difficult. If you think getting your hands on a few graphics cards and mining Bitcoin is going to earn you money you are hugely mistaken.
Most profitable miners are moving on to ASICs (Application Specific Integrated Circuits) which are purpose-built systems that only mine a specific currency. If you are truly interested in investing in virtual currency, start there. There is no free ride, and you’ll have to analyze markets and be aware of the risks. The $4,000 machine you just purchased and ran at 800 watts an hour may earn you a coin that is worthless tomorrow or made straight-up illegal to own (looking at you, Petro).
Cryptocurrency is the future. I think it’s only a matter of time when technology will dominate over the classic governing bodies as we know them and the old way of each government having its own currency will become too restrictive and lethargic to keep up with a modern, computer-driven world economy. That being said, despite decades of development cryptocurrency is still in its infancy. We’ll eventually have to let the older coins like Bitcoin go for us to allow the other alt-coins to evolve. Until then, I recommend you simply enjoy the cryptocurrency market and what it represents. There’s nothing to fear from it and the potential it has for the future is staggering.
Justin Agrell has been a certified IT technician since 2005. He loves Linux, adventure motorcycling, and computer gaming. To get in touch, just email him at Justin@U4E.US.