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The rise of Cryptocurrency

On December 15, Ali M. Ahmed (’18) was contemplating whether or not to invest in Ripple, a well known cryptocurrency, on a continuous, stable trend. He saw that the Ripple shares were $0.79, and he believed that the company’s mission statement which included ideas such as frictionless and efficient transactions were thorough. He decided against it but a month later, Ripple shares hit $3.70. Ahmed missed the chance to multiply his money by more than four times his original amount.

Cryptocurrencies are decentralized currencies, meaning there is no controlling administrative power, such as a government, involved with the transactions. Over the past four months, cryptocurrency has gained global news coverage, such as ‘cryptocurrency’ being added to the dictionary, with Bitcoin as the most dominant contender for a new currency.

Bitcoin, the leading cryptocurrency, has shares rising from $963 on January 1, 2017 to an all-time high of $20,000 in mid-December. Cryptocurrency has taken the world by storm, now with a market cap at around $377,000,000,000. Different to the dollar or pound, cryptocurrencies are non-tangible and extremely volatile in their value. In effect, some people have become billionaires, whilst others have lost everything.

Anna Heinrich (’20) became interested in Bitcoin earlier in 2017 when she used them to purchase something over the internet. Once she realized the possibilities, she started buying and selling her stock in order to make money. Heinrich initially invested £200, and by buying and selling more she has made around £1200 in profit.

Similarly, Jimmy Wafa (’18) has been interested in cryptocurrency for the past two months and immediately decided not to invest in Bitcoin because he felt as if he missed the opportunity to maximize his profits. “I didn’t feel like the returns were high enough to outweigh the risks,” Wafa said.

Wafa was unsure about investing into Bitcoin because he felt like it was hard to invest into something where the creator isn’t known. The founder of Bitcoin goes by the alias, Satoshi Nakamoto, who has remained anonymous for his own protection.

Instead, Wafa chose to invest in cheaper, lesser-known currencies at the time, such as Ripple, Cardano, Stellar and TRON. “Over winter break, I spent a lot of time researching smaller currencies, watching YouTube videos, and setting up accounts, which, even though it was a tedious process, it was well worth it,” Wafa said.

Ahmed also had concerns with the risks involving Bitcoin, so after a long, strenuous time, he decided to invest in Ripple, because it is a currency that works directly with banks. Even though he invested after the large increase in share prices, he is content with holding his shares for the year. “The [Bitcoin] market is extremely volatile which has made people shy away from investing. [Ripple] works with banks, which will make bank transaction fees cheaper and transaction speeds faster overall,” he said.

Heinrich believes that “[Bitcoin is] a big deal because it’s money that you can control yourself. Basically how you, your friends and the other people in the world buy and see it, determines its worth.”

Heinrich agrees that the unregulated market can unpredictably benefit or damage an investor as “there is no outside force that controls it. That’s scary but also cool, it puts you in charge of your own finances, which is appealing to a lot of people.”

Similarly, Jeh Vandrevala (’21) was incentivized to start exploring cryptocurrencies because he was interested in the idea of increased power that people have in transactions instead of banks. “I saw that all the cryptocurrencies were on the rise, and I never really knew much about it,” Vandrevala said. “I thought it was quite interesting how it’s only the computer that you are dependent on, the code and nothing else.”

Although the popularity of cryptocurrencies is growing, Vandrevala notes that one major drawback is that it is not recognized by many countries and companies. “The problem with [cryptocurrencies] is that it’s not really universally acceptable,” he said.

Similarly, Wafa feels that once countries and companies believe in cryptocurrency, it will only increase its dominance. “The value of a currency is based on people’s demand for it and currently there are many people who still don’t believe in cryptos. Hopefully, if more people begin to understand the technology and the markets, the cryptocurrency world will take over,” Wafa said.

Computer Science Teacher Livia Santos, who has been investing in Bitcoin since last year, also sees the increasing use of cryptocurrencies. “It’s a global currency, it’s like there’s a fictional market that is the web and it doesn’t depend on what’s happening in the real world, it only depends on what’s happening in the virtual world,” she said. “So it’s like we’re creating this whole other country called the internet… That’s what I feel is fascinating.”

However, Santos sees that the anonymous nature of cryptocurrencies as a negative. “The reason people decide to use Bitcoin is because it’s not as easily traceable as other things,” she said. “People also use it to buy illegal things on the dark web… you can use it for ransom money, use it to buy illegal things online.”

Vandrevala agress and believes that a hesitancy of using cryptocurrencies comes from how abstract and untraceable the money exchanges are. “No one knows who has [the currency]. The way that [companies] track who has the money is by account names and no one knows who owns those accounts,” he said. “I think that’s what causes a bit of fear.”

Despite this negative side to cryptocurrencies, Santos believes it is also important to recognize the positive impacts that cryptocurrencies can have. “A lot of people go directly to the negative side.. and that’s what we have to move away from. We have to understand that Bitcoin is not only for negative things,” she said. “My friend, she is a mom, she invests in four different cryptocurrencies because she wants to invest and she wants to grow her personal wealth, and that’s awesome.”

Wafa feels that he has found great success and he plans on holding his money rather than trading his shares daily. “I initially tested the market by simulating transactions and my returns were incredible,” Wafa said. He was able to multiply his earnings by 300%, and he plans to hold his money throughout 2018, regardless of any spikes in the market. “If I were to constantly trade daily, it would overwhelm me. I don’t want to regret selling before a possible large increase,” he said.

As the future of cryptocurrency is uncertain, Wafa believes that only time will tell whether cryptocurrencies succeed. “You can’t predict what is going to happen with these currencies in the long term. We could be at the end of the line and the ‘bubble’ could burst today, but this could also be the beginning and we could only go up from here,” he said. “Cryptos could go to the moon and could completely replace certain currencies in the world.”

Moving forward, Heinrich believes that Bitcoin and other cryptocurrencies could be incorporated into the school curriculum. “It’s a part of the growing world,” she said. “As it becomes more of a part of our everyday lives, [the school] has to teach us about it.”

Written by Opinions Editor Sophie Ashley, Managing Editor: Print Ananya Prakash, Features Editor Martha Duff and Staff Writer Amaan Zafar 

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    Mariam MathewMar 18, 2018 at 9:15 pm

    We do already teach about cryptocurrency and the underlying technologies in Technology and Culture. In fact, Daniel Philips did a wonderful presentation last semester for his peers about how cryptocurrency works, how he earns Bitcoin through protein folding and his own investment in other cryptocurrencies. They are also debating this in Topics in Government and Law. It’s already happening!