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Cracking Down Crypto: Why cryptocurrency has taken over pop culture

Two weeks ago it was worth $15,000. As of Wednesday, it’s worth $11,000. By the time this article is published, who knows?

But at the start of last year, it was worth only $1,000, according to Coindesk.

Bitcoin — the world’s most popular cryptocurrency — skyrocketed over $18,000 in value over the past year and thus propelled itself into the forefront of pop culture. The digital currency has made headlines all over television and the internet and even had its own “Bitcoin Ballin’” Snapchat story featuring the craze.

In a Harbinger poll of 270 students, 98 percent said they had heard of Bitcoin, yet only 62 percent had heard of the term cryptocurrency, and over half of the students had little to no knowledge of what that term even meant.

Cryptocurrencies, like Bitcoin, are completely digital currencies — they don’t physically exist. The currencies use sophisticated technology to secure and control the transactions and amount of currency called cryptography, hence the name.

Additionally, cryptocurrency uses the relatively new “blockchain” technology, a kind of digital ledger, or collection of financial records, that keeps track of every transaction made using the currency, according to PricewaterhouseCoopers. The network where these transactions take place and are recorded is peer-to-peer, meaning only the person paying and the person receiving the currency are involved in the transaction. Therefore, they are decentralized and not controlled by a country, central government or middle-man to verify each transaction. This makes the transactions essentially self-verifying and direct without the need of an intermediary like a bank or third-party service.

Because of this, cryptocurrency and the technology around it is renowned for its security, able to keep transactions anonymous and be very difficult to be tampered with or altered according to Business Insider. Additionally, cryptocurrency is not tied to any centralized currency like the U.S. dollar or the Euro, theoretically allowing people to globally exchange currency quickly without the need to convert currencies.

These technologies have excited media and the public, and among the excited is senior and Investments Club founder Sam Fay.

“A lot of people are thinking that currency can evolve because traditionally currency has been backed by a state or a government and that’s what makes currency matter,” Fay said. “But in this day and age, we’re kind of globalizing and the borders between different groups of people are smaller. People can access information a lot easier due to having cell phones, internet, and because of that, cryptocurrencies have been an international currency.”

According to former financial advisor and head lacrosse coach William Garrett, Bitcoin has already started to become a true benefit to people around the world.

“In Zimbabwe or Venezuela, their government currencies are so inflated that they really can’t trust their governments,” Garrett said. “They’re too corrupt, so it’s actually less volatile and less risky for them to put their money in Bitcoin and get it out of the government system than it is to actually hold their own currency.”

However, the technologies behind cryptocurrency are still relatively recent, and as for the time being, Garrett and Fay compare investing in cryptocurrency to investing in an idea.

“It’s not software, it’s not grain, it’s not an actual thing, it is the support of an idea,” Fay said. “So the support and the money behind these cryptocurrencies have been just really unprecedented and a very strange kind of anomaly that happened in the world of investing.”

Though these “ideas” have proven their benefits in some ways like in Zimbabwe and Venezuela, multiple new complications regarding issues of regulation and uncertainty in the global cryptocurrency market have arisen in January alone.

Various reports from earlier this month have detailed that China is planning to expand their current ban on cryptocurrency exchange trading, and South Korea’s Justice Minister Park Sang-ki announced that the country is discussing a ban over cryptocurrency exchange trading as well.

Furthermore, four researchers published a piece in the Journal of Monetary Economics at the beginning of January that correlated a 2013 spike in value of Bitcoin from $150 to over $1,000 to the suspicious trading of one actor, concluding that “unregulated cryptocurrency markets remain vulnerable to manipulation today.”

These recent developments have attributed to a significant drop in the total market value of cryptocurrencies from $830 billion to $535 billion in just over a week, according to CoinMarketCap. From Jan. 16 to Jan. 17, the value of Bitcoin alone has dropped from $13,000 to under $11,000.

Regardless of the current instability, Fay and Garrett see a future in cryptocurrencies, and Fay predicts that in 25-30 years, cryptocurrencies could become a global, mainstream medium of exchange. However, he believes that it will take an entirely new cryptocurrency to ultimately reach the mainstream, and in order for cryptocurrency to become widespread, it must first prove its security, be accepted by governments and connect with physical goods to prove its own value.

“People need food to eat,” Fay said. “When cryptocurrency can connect [them] with that food to eat, that is when it has concrete value and that is when people are gonna be confident in its value.”

On the other hand, AP Economics teacher Robert Bickers does not believe that this future can be realized in his lifetime due to lack of government support and consumer skepticism.

“I know where my cash is, my bank is backed by the Federal government,” Bickers said. “[With] my digital wallet, if my hardware gets corrupted, where is my money? Even if they’re not completely rational, these concerns will prevent greater acceptance.”

So tomorrow, who knows? Maybe Bitcoin will recover and rise above its current peak of $19,000. Maybe it will crash and people will move on to invest in more stable and promising cryptocurrencies. But one unanswerable question will still remain: what will the future hold for cryptocurrency?


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