There are a lot of converging factors, but cryptocurrency is in another bull run, one that has taken the value of the most valuable token on the market close to six-figure valuations.
This has gotten a lot of people excited to get in on the market, for obvious reasons. And it is not too late to register for a crypto card and get on an exchange to enjoy one of the fastest moving and most modern markets out there.
Crypto has only realistically been around for 15 years, even if the technology can be traced back to 1982, but to say it has been an eventful decade and a half has been an exceptional understatement.
It was a market, technology and currency system created by and for people living in interesting times, but whilst the timeframe is relatively small compared to other financial markets, that is not to say there are no lessons that can and have been learned since then.
A Long Way To The Top (If You Want To Be Legit)
After noting how in just 15 years Bitcoin went from valuations in the fractions of pennies to nearly $100,000, it is perhaps rather ironic that true long-term success in cryptocurrencies has come from taking the longer, more ethical paths, rather than the get-rich-quick schemes.
The story of crypto is about the long road to legitimacy, capped off by the approval of spot Bitcoin ETFs, allowing other forms of investors to benefit from cryptocurrency’s bull market without necessarily going through the process of creating a wallet and engaging directly with exchanges.
However, this legitimacy benefits those who did opt to register a wallet as it increased the value of Bitcoin specifically and the entire crypto market alongside it. Attempts to try and get rich quickly from crypto using less ethical and legal means have seen far less long-term success.
The first boom came from the publicity surrounding the illegal marketplace Silk Road, an early dark web online marketplace that was ultimately shut down by the FBI for obvious reasons relating to the deeply illegal products that could be bought and sold on there.
The arrest and life imprisonment of its creator led to an early crash as well, and whilst this is obviously an extreme example, a lesson that so many in the crypto space have learned is the importance of filtering out bad actors.
Security Is More Than Just A Slogan
The development of cryptocurrency was originally designed around the idea of security, a trustless payment environment and confidentiality, but there are multiple vectors of security, and a lesson many people who wanted to take crypto seriously learned quickly is to treat security seriously in all aspects of a transaction.
The combination of cryptographic hash addresses for wallets and an open ledger that anyone can access means that transactions are pseudonymous; they are secret and secure as long as the private key is kept hidden.
As Andreas Antonopoulos famously put it in 2017, keys mean ownership, and having the keys means that the wallet and everything inside it is yours. Your keys, your crypto.
As with other forms of financial protection, security is not just a matter of robust technology to avoid man-in-the-middle attacks but also a matter of training and education to avoid social engineering traps such as password inspectors.
The technical components that keep crypto secure are focused on ensuring transactions follow the rules and cannot necessarily freeze or reverse transactions except in extreme circumstances such as the hard fork of Ethereum following The DAO’s hack.
It is a lesson that institutions have sometimes learned the hard way, perhaps most famously with Mt Gox, a huge cryptocurrency exchange that fell apart due to security breaches and failures which not only cost hundreds of millions in itself but shattered investor confidence.
The Role Of Cryptocurrency Itself
There have always been questions about cryptocurrency as a currency itself, something that is less about denotation and more about application.
Cryptocurrency tokens are forms of money by definition, given that they meet the three functions of being a store of value, a unit of account and a medium of exchange.
However, under the principle that the purpose of a system is what it does rather than any intended utility, crypto tokens have a wide range of purposes, but for many people entering exchanges, is the intent to have a unit of exchange to buy and sell goods or a speculative asset to invest in?
If it is the latter, then the volatility for which cryptocurrency is synonymous and is often a point of criticism with some schools of economics is its biggest feature.