Unveiling The Three Faces Of Cryptocurrency
With the tempting financial reward from cryptocurrency mining, it shouldn’t be a surprise that people across the globe come rushing to try mining their way to wealth.
Thomas Edison, who invented the incandescent light bulb, was only 11 months old when a carpenter discovered gold in the 30-mile-long American River in California.
On January 24, 1848, James Wilson Marshall found gold nuggets on that part of the American River that runs at the foot of the Sierra Nevada Mountains. News of his discovery spread like wildfire.
As the glitter of gold never fails, people – both in the U.S. and from abroad – came rushing to mine the precious metal in Coloma in El Dorado County, California, according to History.com.
The historic incident became known as the California Gold Rush (1848-1855) of the 19th century.
This 21st century, the “new gold rush,” as Investopedia mentioned in one article, has been cryptocurrency.
For California resident Laurie Voss, it appeared that several bright tech people got “very, very excited” about cryptocurrency.
Voss, a tech person himself – he’s a web developer and data analyst – admitted that it’s “very frustrating” to learn about the enduring popularity of cryptocurrency.
He wrote about it in an article published in January 2022 on his website Seldo.com and gave it the title, “Crypto: The Good, The Bad and The Ugly.”
What likely upsets Voss is that the more he studies cryptocurrency, the more he discovers things about it that, in his words, “seem stupid, or useless, or actively bad.”
Yet, despite these unpleasant findings, “so many people are into it,” he lamented.
Such “magnetic appeal” of mining cryptocurrency, according to Investopedia, stems from the crypto tokens awaiting miners.
Apparently out of his self-confessed frustration, Voss discussed what he believes to be the good, the bad, and the ugly things regarding cryptocurrency.
For Voss, below are the good things about cryptocurrency:
(a) Technical achievements
The creation of digital currency, the blockchain that acts like a virtual ledger, the mining process, the rules that govern crypto, the trading procedure, etc. Plus, the Distributed Autonomous Organizations (DAOs) that function as virtual wallets and the computer program called smart contracts for the cryptocurrency Ethereum.
For Vos, they’re “all quite cool and impressive, technically.”
Specifically, Voss underscored “two major technical accomplishments” of cryptocurrency.
First, it solved a system problem that arises when “nodes can cooperate without trusting each other.” Cryptocurrency didn’t include trust as a factor to make a profit. What it promotes is cooperation. As long as people cooperate, they’ll earn money.
Second, it prevents abuse from occurring. For one, it makes network resources expensive, which deters people from over using them.
(b) Financial engineering
Having a system of networks that can create digital currency is one impressive feat.
Crypto is all about “speculation,” according to Voss, and as people speculate on currency and art (citing non-fungible tokens or NFTs), they not only earn money; they get entertained, too.
(d) True cloud computing
Writing an application and running it becomes free.
As for the bad things about cryptocurrency, they are the following, according to Voss:
(a) Environmental impact
The higher the number of people mine, the more energy consumed; hence, the more it could be detrimental for the planet.
(b) Interactions at boundaries
No interactions happen outside the network (which is the physical world). In the case of NFTs, this poses a problem, as Voss mentioned about artworks sold in the form of NFTs without the knowledge and permission of the original creators/artists.
(c) DAOs have a major boundary problem
In the physical world, people (e.g., a board or a committee) manage an organization. In the crypto world, “a set of rules written down in code” appear to manage decentralized autonomous organizations (DAOs), according to Kraken, a San Francisco-based cryptocurrency exchange and bank.
For that, Voss thinks the actions of the DAOs are “legally unclear.”
Democracy seems to be lacking or non-existent at all in terms of governance. To partly remedy this problem, Voss proposes to create a “fairer” governance system that will “distribute voting rights long term [sic].”
As for the ugly part – and “there's no shortage,” Voss stressed – it all got something to do with money being the central point of cryptocurrency. Issues concerning theft as well as crypto scams and other fraudulent money-making schemes (e.g., pyramid schemes; Ponzi scheme) also abound.
As of January 12, 2022, CoinMarketCap provided these cryptocurrency prices (in U.S. Dollars) for the top five on its list:
(1) Bitcoin – $42,842.36
(2) Ethereum – $3,239.36
(3) Tether – $1.00
(4) BNB – $460.31
(5) Solana – $142.48
Those looking for cheap cryptocurrencies to buy, GOBankingRates, an American personal finance site launched in 2004, recommend the following:
(1) XRP – $0.7693
(2) Dogecoin – $0.1521
(3) Chainlink – $26.60
(4) USD Coin – $1.00
(5) Cardano – $1.19
(6) Polygon – $2.33
(7) Stellar – $0.2598
(8) Tether – $1.00
(9) Decentraland – $2.90
(10) Shiba Inu – $0.0000281
(Note: All prices are in U.S. Dollars and per digital coin and taken from CoinMarketCap.com on January 12, 2022.)
Even after reading the good, the bad, and the ugly things about cryptocurrency, based from the professional opinions of Laurie Voss, you may still find yourself undecided whether to invest in crypto or not.
To help you with your indecision, Investopedia suggests that you do the following before investing:
(a) Make your own research offline and online about cryptocurrencies, but don’t only focus on the popular ones, such as Bitcoin and Ethereum. Study them as well as blockchain technology.
(b) As you do your research, look for white papers about cryptocurrency. Read them thoroughly.
(c) Look for credible online communities of crypto supporters. Join one of them.
(d) With the high volatility of cryptocurrency, Investopedia also asks you “to time your investment.”
For January 2022, the top 10 cryptocurrencies, as gathered by Forbes Advisor, are (the amounts presented pertain to market cap):
(1) Bitcoin – over $809 billion
(2) Ethereum – over $385 billion
(3) Binance Coin – over $76 billion
(4) Tether – over $78 billion
(5) Solana – over $44 billion
(6) Cardano – over $39 billion
(7) USD Coin – over $44 billion
(8) XRP – over $36 billion
(9) Terra – over $26 billion
(10) Polkadot – over $25 billion
CoinMarketCap defines “market cap” as “the total market value of a cryptocurrency's circulating supply.” Its computation formula is: “Market Cap = Current Price x Circulating Supply.”
(Note: All prices are in U.S. Dollars and taken from CoinMarketCap.com on January 12, 2022.)
For people who are into technology – and cryptocurrency is a techie thing – Investopedia asks them, “Why not do it?”
But, it’s not all about one’s inclination towards technology (or the absence or lack of it).
In an effort to somehow reconcile his conflicting views on cryptocurrency, Laurie Voss referred to a Tweet by someone with the Twitter name “JMD” (@jmdiegog).
This “JMD” tweeted on January 4, 2022 about crypto being “just a piece of human culture.”
People want money. People need money.
This time, several people take their chance on cryptocurrency, which is just another way for them to earn money.