Cryptocurrencies, or digital currencies, are now a rapidly expanding international phenomena.

In
the past year, the market has exploded in popularity and value, but with great growth also comes
great controversy. With governments struggling to keep up with regulation and Wall Street
investors putting their faith in cryptocurrencies as the future, it is worth exploring what this new
phenomenon means for us all. A cryptocurrency is a digital currency that works independently of
government or any centralized authority (Riley, 2021). Unlike normal currencies, which are
issued by central banks, cryptocurrencies are decentralized. There is no central repository that
issues new units of currency; instead, units of value will be created in the form of tokens on a
blockchain – an encrypted public register where all transactions are managed. A blockchain is
essentially a giant ledger that can track the history of any transaction made within its network.
Each new transaction must be verified by users on the network and stored in order to form the
lasting historical record along with all other previous transactions. This new technology allows
for multiple digital currencies, with Bitcoin being the most famous and valuable one.
The first cryptocurrency was created in 2008 by Satoshi Nakamoto, a mysterious programmer.
Cryptocurrencies are digital, so they are not tangible like dollars or euros, but can be used to
purchase goods and services. A limited number of units of each cryptocurrency is produced
(mined), and once these have all been released into circulation the production will stop (the
maximum number is known as the "cap"). The tokens are encrypted using powerful
cryptography that cannot be hacked; only the creator can unlock them to release them into
circulation. Like a traditional currency, each token is also issued by a central authority and
managed by that entity. For example, Bitcoin has a single powerful authority in the form of
Nakamoto; all Bitcoin transactions must be processed through the blockchain hosted by
Nakamoto. This protocol has become known as "Bitcoin" to differentiate it from other
cryptocurrencies. Other cryptocurrencies have emerged in the past few years, but Bitcoin's rise to
prominence has made it the most popular currency over time. Its value peaked at close to
$20,000 in December 2020; however, this can be attributed to speculation instead of tangible
value for now. The value of cryptocurrencies can fluctuate drastically in response to market
forces, such as Bitcoin's dramatic price increase last month alone (47%).
Reference
Riley, J. (2021). The current status of cryptocurrency regulation in China and its effect around
the world. China and WTO Review, 7(1), 135-152.