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Earlier this year, cryptocurrency was a phenomenon sweeping across many developed countries. More and more people were opting for a more convenient method of payment by using less and less physical currency. Today, it is not uncommon to see people, and especially students, completely abandoning cash and instead using apps such as Apple Pay and Samsung Pay. This increase in demand for money to become virtual is only going to continue to grow.
Blockchain is a technology that allows data to be public and easily verifiable. At the same time, it is much safer than any other existing technology because Blockchain does not have a central database – the data is so flared out that hackers are not able to spot an exact location to hack.
This should theoretically significantly lower the chance of your account being exposed to hackers. Now, the biggest controversy is whether the government restriction on cryptocurrency will deter the development of blockchain technology or not.
Blockchain technology became an issue in both the engineering market and financial market because of the popularity of Bitcoin among investors. There was news reporting the successful story of Bitcoin investors daily, praising it as the future of the investment market. Bitcoin, however, has its own fatal flaw – Bitcoin (or cryptocurrency) cannot serve a social function to be considered as a currency.
There are three principles that currency must serve. First, the currency must be a medium of exchange. Second, the currency must be a store of value. Lastly, the currency must be a unit of account (if you want to know more about what these terms actually mean click here!).
Today, we see some of the online stores that accept bitcoins as a transactional function. These offline stores, however, are too few for it to serve as a social function. Furthermore, there are restrictions on its uses in online stores. This is because popular online stores such as Walmart and Amazon don’t accept it.
This leads to the biggest flaw of cryptocurrency. Because it lacks in the social function, people purchase it solely for the investment purpose. Customers for these cryptocurrencies are investors who are looking for profits by gaining the difference between their initial payment and final pay-back. Because of this unstable value due to speculative actions of investors, the cryptocurrency is hard to be considered as a currency with a store of value.
We have yet to see whether Blockchain technology and cryptocurrency could be separated or not. There are already some of the countries that prohibited the transactions of cryptocurrency in the financial market to protect their citizens. On the other hand, there are some countries that are letting the markets of cryptocurrency to grow. Yet, it is an unavoidable fact that Blockchain technology will serve as a critical foundation for the upcoming industrial revolution. We just have to wait and see.
– Jeff Koo
