Holds for Cryptocurrency: Establishing the cyber yuan and the initial public offering (IPO) of cryptocurrency exchange Coinbase has brought crypto (digital currency) into the mainstream. The business concept of Permission.io involves distributing digital currency in return for permission-based advertising and using Auth0 to secure its platform. We asked Hunter Jensen, their chief technology officer, to write a piece about the future of cryptocurrency.
Investing in cryptocurrency these days might be like riding a roller coaster. Things are shifting, though. With Coinbase’s recent public valuation of $86 billion, we have witnessed the first ever valuation of a bitcoin corporation. Digital currency is being discussed or even created by governments. I believe that crypto wallets will be ubiquitous for the following reasons.
What Is Cryptocurrency Anyway?
Cryptocurrency refers to digital money that is issued via a decentralized system of computers and laws known as blockchain. Blockchain is a distributed ledger that records transactions in a decentralized manner. Its unique selling point is that it is typically not controlled by a single entity because of its decentralized nature. Blockchain technology employs intricate mathematical and cryptographic procedures to ensure each transaction’s legitimacy. If you believe in technology, you can know that a transaction is happening without a bank acting as an intermediary.
The difference between fiat currency, controlled by a central authority and issued by a government order (or fiat), and cryptocurrency is best understood in this light. Because of its controllability and stability, fiat is an excellent medium of exchange and store of value. Its worth will remain constant regardless of where you put it after a transfer. Hyperinflation and depression are possible outcomes of a government’s excessive money printing, but they require time to materialize. The modern concept of money has its roots in a far older system.
Using fiat currency for large, complex transactions is also time-consuming and costly. For example, suppose you’ve ever attempted to transfer funds from the United States to a country in Eastern Europe to purchase a home. In that case, you know that it can become rather complicated and time-consuming.
Crypto pros and cons
There are advantages and disadvantages to crypto. It’s frequently anonymous, cheaper, and far quicker. You can complete a transaction directly without involving a reliable third party. The transactions are usually less complicated, quicker, and cheaper. Unfortunately, anonymity isn’t always a necessary condition for legitimate peer-to-peer transactions.
Crypto is also quite unpredictable. Because of this, it cannot be used as a unit of account just yet. While it may retain some value, that value will be quite volatile. During the thirty minutes I’ve spent writing this essay, my cryptocurrency portfolio may have dropped by ten percent; nevertheless, it will rise again in a few hours. The regulations and methods of transaction that govern cryptography set it apart from fiat cash.
To trade cryptocurrencies, like fiat money, one can use an exchange like Coinbase, just like one would trade equities on a stock exchange. CoinMarketCap lists almost 4,800 different cryptocurrencies, and I expect that figure to continue rising for some time. It is also possible to issue cryptocurrency that is not listed on an exchange. Although it cannot be sold, technically, it is still a token. Because of this, its worth is intrinsic and not transferable. Know what you’re getting into before investing in cryptocurrency. That will be covered more in the future.
We Welcome Government Regulation — Really
If you’re unfamiliar with Permission.io and similar crypto-based enterprises, you might be surprised to learn that we support government regulation. We are in the midst of the Wild Wild West at the moment. Businesses are finding it difficult because there is not a lot of certainty.
Major financial institutions are beginning to record Bitcoin and other cryptocurrencies on their balance sheets. This includes Tesla, JP Morgan, Visa, PayPal, and others. Due to the absence of regulation, it is unclear how a firm like Tesla will declare Bitcoin on its taxes. Despite Tesla’s decision to stop taking Bitcoin, several dealerships still use digital currency. In the United States, in particular, businesses may find it challenging to comply with or carry out routine operations due to the patchwork nature of the regulatory landscape. However, the digital currency has not disappeared because of that difficulty. I mentioned that the numbers are rising, and even governments are interested in digital money.
The most recent data I could find on CoinMarketCap put the value of the entire cryptocurrency market at $1.99 trillion. China has already produced the cyber yuan. The genesis of “Bitcoin” is being investigated by a task team established by the United Kingdom. Even established Latin American banks are beginning to see the necessity for oversight. Former investment banker and crypto professor Gary Gensler was appointed head of the Securities and Exchange Commission (SEC) by the Biden administration in the United States. Because of Gensler’s firm stance on cryptocurrency, regulation is likely to become more transparent. U.S. regulations will likely be finalized in the latter half of 2021 or early 2022.
Want to Get into Crypto? It’s Not for the Risk-Averse
Imagine a wealthy person. Except for early-stage company investments, that person’s cryptocurrency holdings are likely their most precarious investment. Be careful with cryptocurrency; you never know what could happen. Putting your nest egg in danger here is a bad idea. The cryptocurrency market is highly variable and unpredictable. If you’re still interested in crypto, nevertheless, you should know the following:
- Make sure you’re trading on a well-known and reputable exchange. It would be best to be wary of risky exchanges that could disappear with your money. It would be best to verify that trading on this exchange is legal in your country and that you have thoroughly investigated its reputation and reliability. Even if you can legally purchase cryptocurrency, you may be unable to trade it owing to geographical restrictions.
- Watch out for phishing attacks. Phishing aims to get consumers’ sensitive information by deceiving them into divulging login credentials. Although everyone using digital networks is vulnerable, crypto can make you a much more appetizing target. Acquaint yourself with the most prevalent vulnerabilities. One way to safeguard your coin is to pause before clicking.
- Crypto timing is minutes, hours, days, weeks — not years. Time frames spanning days, months, or even years are commonplace in stock trading. Crypto trading can take place in a matter of minutes, hours, days, or weeks. People have been planning for years, but it’s difficult to tell because crypto hasn’t been around for long.
- Trading happens 24/7. Monday through Friday is trading time on the American stock market, with holidays excluded. Crypto is always active; there is no shut-down period. For instance, by the time you rise in the morning in the United States, Asian traders will have been up all night. Your cryptocurrency wallet may be significantly affected by this.
- Only risk what you’re willing to lose—reiterating this statement for emphasis’s sake. Unregulated and extremely dangerous, this is the place to be. Make sure you stay safe.
How Secure Is Crypto?
Bitcoin’s security is stunning. Since every line of code is open, some of the world’s smartest minds have spent years trying to get in without success. You may have seen news about “the Bitcoin Hack.” Bitcoin was not hacked. Hackers targeted Bitcoin companies. Due to a site vulnerability, the cryptocurrency hardware wallet Ledger exposed its e-commerce and marketing datasets. Phishing attempts were easy because criminal actors received people’s emails, phone numbers, and last site visits. Due to widespread internet use, much of our data is already online. Bad actors can target crypto wallet owners with phishing attacks to get private keys.
Bitcoin is a safe core system, but you still need to secure third-party systems that store data about it. Like the American financial system, crypto security requires a strong ecosystem and vigilantes. Debit card skimmers plagued Americans at gas stations not long ago. Banks responded by attaching chips to cards. Any industry that has sensitive data must be careful.
Permission.io needs each user’s actual human identification, like a bank. That identification must be transferable between systems and third-party systems without being compromised. You must show your driver’s license and identity in a bank branch. Identity management and other security measures are essential to the cryptocurrency system’s architecture, but it’s tougher to execute online.
The Future of Crypto and Blockchain
Many sectors experimented with blockchain three years ago. That changed. A supply chain is likely the greatest blockchain adopter after crypto. Walmart and other organizations use blockchain to address difficulties. Blockchain is used in insurance, fintech, energy, and medical records. I predict adoption will increase as the ecosystem of third-party support for blockchain usage grows due to its immutable record.
Crypto is maturing like blockchain. Recently, Elon Musk sold 10% of Tesla’s Bitcoin stake. Musk tweeted that he did so “to prove liquidity of Bitcoin as an alternative to holding cash on the balance sheet.” These steps may accelerate regulation. In five years, I expect clear regulation.
Coin consolidation is coming. Those without financial backing and utility will fail. I think many national governments will issue digital currencies. After coin consolidation, the remaining coins will be stable for transactions.
I expect the typical person to value Bitcoin in 10 years. Bitcoin will be a store of value account. A developed and stable currency needs three elements. Transferable, a unit of account, and a reliable store of value are required. I think crypto will mature like this despite its volatility. Crypto will become more prevalent in corporations, governments, and daily life.
The unhidden fact is that I don’t think governments will control money for long. Decentralization of economic and financial systems scares them. If governments embrace it, it can work. They’ll struggle harder if they resist it since you can’t govern an outlawed currency. Government regulation and taxation of crypto make the system more stable for everyone.
