My opinion on cryptocurrency is no secret; I think this is an emerging technology that will eventually be adopted by national banks as an additive to legal tender. At the moment cryptocurrency is privately held trading options that many private business owners use as a form of payment only due to the speculative nature of the “coin” and the fact that people agree to buy and sell it in hard currencies.
In reality, cryptocurrency is software code that is given as a prize for using your computers PC to “hash” transactions. It became a currency when people started to buy and sell it using legal tender such as US dollars. This then created a new market value for bitcoin, but it did not give bitcoin legal tender status. Bitcoin is more like a casino chip, it can be used in the casino and can be traded for hard cash, but it is not hard cash and is not a currency.
Having stated this, we cannot overlook the obvious, millions of people around the world are hoarding cryptocurrency, and hundreds of start-ups are trying to release upgraded blockchain platforms for new ‘cryptocurrencies’ where the currency can be based on anything from “hashing” to writing articles. The recent hype has been ICO’s which is initial coin offering, allowing suckers to give hard cash for virtual dreams. You basically buy a new cryptocurrency for whatever value the company has set, instead of buying a share in a regulated IPO, you give a loan through an unregulated ICO. The cryptocurrency then gets an initial value, and it will either increase or decrease based on its trading demand. Usually, trading cryptocurrencies are based on a false premise that they always go up and that they will replace legal tender. This is a false premise, in fact, its so far from reality that it always amazes me how many suckers there are out there. While quite a few have become millionaires through cryptocurrency trading, the reality is that legal tenders main function is to represent their accumulated assets assured by a regulated central bank. Currency is a regulated legal value while a cryptocurrency is a privately traded commodity.
Bottom line, cryptocurrencies are in fact snippets of code protected by unique passwords in a blockchain platform. The blockchain platforms are being mistakenly or falsely used to represent currencies. What a blockchain platform is, is a software application platform that is downloaded onto user PC’s and the user PC is the used to help make transactions. The coin being used over the blockchain is called a cryptocurrency, and its value is only given by the amount of legal tender a person is willing to buy it for, similar to the price of any commodity such as gold, wheat or cars. The main difference is that a commodity is something tangible, a blockchain transaction is a virtual service.
A dent in the wall of cryptocurrencies will be the Bank of England’s introduction of a sterling-based digital economy using a bank linked blockchain platform. The British cryptocurrency platform will not replace the hard cash version; it will supplement it and be used alongside the legal tender. Bitcoin and cryptocurrencies may never disappear, but they will never replace legal tender. They will always remain a commodity or asset.
Now to the story of Ripple, a cryptocurrency that is attracting a lot of attention. This cheeky contender to the crown of private digital coinage is claiming to be the next successor to bitcoin. Their claim is that bitcoin is old tech, and the evolution of blockchain technology is leading to new currencies. What is Ripple? It is a blockchain company that called Polymath that pays for its platforms usage on a client’s PC in “Ripple” cryptocurrency. So, the platform is Polymath, and the commodity is Ripple. It is gaining power due to some clever marketing, and the platform is growing fast. They claim that their currency will become more popular and more expensive than Bitcoin since they developed a blockchain platform used by banks. Whether this is true or not remains to be seen. However, with so many blockchains and Ethereum platforms vying for more and more customers, the reality is far from what Ripple suggests. There is no single global platform that links everyone together, even giants such as Apple, Alphabet, and Microsoft constantly compete for control of global OS, and that does not discount possible future contenders that can arise with the rise of global private economies such as Amazon and Ali Baba. So too with blockchain and cryptocurrencies.
Imagine this; if blockchain platforms and cryptocurrencies are valued at their customer base size and number of transactions, then companies such as Didi Xuching and Uber could effectively incorporate their own blockchain platform as their gig economy app and create an Uber and Didi cryptocurrency. With over a million rides a day and over 450 million customers, Didi is a large micro-economy in its own right, and with a cryptocurrency that could supply 450 million users, it would surpass most legal tenders used around the world. However, even if Didi did incorporate a cryptocurrency, it would only become useful if traded into legal tender. Making Didi-Coin the world’s largest cryptocurrency commodity.