Unless you have been asleep for the last year, you cannot have failed to catch the buzz around bitcoin and other cryptocurrencies such as Litecoin, Ethereum’s Ether and Ripple’s XRP. There are even some coins that were created as a joke that are getting significant investments, such as Dogecoin. Dogecoin was created as a way to educate people about how cryptocurrencies work, but the creator never expected it to be used as a currency. Jackson Palmer, the founder of Dogecoin, says himself: “When I jokingly tweeted about ‘investing in Dogecoin’ in late 2013, I never imagined that the tongue-in-cheek cryptocurrency I had just brought into the world would still be around in the year 2018, let alone hit a $2 billion market cap like it just did” in early January 2018. Apparently, Asian investors like Dogecoin because they misread it as Dog ecoin, and investing in a dog-friendly cryptocurrency is very popular in some countries.
It is a little like the craze for cryptokitties that almost broke the Ethereum blockchain late last year. CryptoKitties is a game where users breed and trade digital kittens using Ethereum-based smart contracts, and it became wildly popular, so much so that some cats were being traded for $80,000, and the total value of the game reached $12 million in December 2017. Just for a game using cryptocurrencies to create digital cats.
What I am describing here is the mad world of cryptocurrencies that few understand, many are investing in and no one knows what will happen. Everyone predicts that this is a bubble and the whole market will come crashing down, and yet for each stumble the market takes, it just comes bouncing back. In fact, there is an excellent website called 99bitcoins.com that started charting the predictions that bitcoin would disappear back in 2014. So far, they have tracked 236 forecasts of bitcoin’s death, and yet it still keeps growing. I find this interesting as I have personally been tracking bitcoin since 2011, and have just heard over and over again from my financially experienced colleagues that it is a scam, will fail, is silly, undermines the system and will never work. Yet it does work. It enables people to trade online for low cost with no financial intermediaries involved. This is the real concern: that bitcoin and other cryptocurrencies could eradicate the need for financial institutions.
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