Sidi Mohammed Benabdellah University English for Computer Engineering

National School of Applied Sciences-Fez Reading : Cryptocurrency

Info 1 / S1 Pr. KHOUMSSI

Cryptocurrency

You have probably heard stories of young investors lured by the promise of
quick gains in the world of “crypto,” or cryptocurrency. While it is
Bitcoin that gets the lion’s share of attention, there are over 10,000 digital
currencies in use today. There is the big names, like Ethereum, Binance,
and Ripple. Then there are currencies like Dogecoin and Loser Coin, which
started as jokes. If you are confused by the hype, you’re not alone. So just
what is cryptocurrency? According to Investopedia:

A cryptocurrency is a digital or virtual currency that is secured by

cryptography, which makes it nearly impossible to counterfeit or double-
spend. A defining feature of cryptocurrencies is that they are generally not
issued by any central authority, rendering them theoretically immune to
government interference or manipulation.

Because they are not centrally regulated, cryptocurrencies are touted for one
major advantage: funds can be transferred directly between two parties.
There is no need for an intermediary or third party such as a bank or a
credit card company. This is made possible by a transformative technology
called blockchain. Techbullion defines blockchain in this way:

Blockchain is a decentralized ledger operating in a decentralized system,

unlike the banking system where all transactions are centralized and
maintained by a singular authority. Blockchains can be interpreted as
databases that are infinitely scalable due to the nature of their design. The
individual cells in the database are blocks that can be filled with data. Once
the block is full, it is connected to the previous block to make a chain.
Unlimited blocks can be attached, forming a blockchain.

Is the world ready for virtual currencies? Early activity was dominated by
people on the fringe of the digital economy. Much of the current energy is
created by outsized personalities like Elon Musk, whose pronouncements
are often viewed with skepticism. It appears, however, that we have
crossed a threshold of acceptance, as crypto values increase. As Bull and
Sidi Mohammed Benabdellah University English for Computer Engineering
National School of Applied Sciences-Fez Reading : Cryptocurrency
Info 1 / S1 Pr. KHOUMSSI

Bear notes:

Much of the recent increase in cryptocurrencies’ value is driven by large

financial institutions’ newfound acceptance of the technology as a viable
investment. The CEO of JP Morgan, Jamie Dimon, went from calling
Bitcoin a “fraud” in 2017 to allowing clients to access Bitcoin funds in
March. Legendary hedge fund manager Paul Tudor Jones has used bitcoin
as a hedge against inflation, and CitiGroup claimed in a March 2021 report
that Bitcoin was “at the tipping point” of going mainstream. To top it off,
El Salvador made Bitcoin legal tender in June, becoming the first country to
do so.

Of course, governments get twitchy when novel investment vehicles start

taking off. In addition, because cryptocurrency transactions may be
anonymous or semi- anonymous, they could be attractive to criminals. For
these reasons there is lots of talk of regulation. In the U.S., Gary Gensler, the
chair of the U.S. Securities and Exchange Commission or SEC, has taken
a firm stand. As the Guardian reports:

Gensler said on Tuesday that the crypto market involved many tokens that
may be unregistered securities and left prices open to manipulation and
millions of investors vulnerable to risks. “This asset class is rife with
fraud, scams and abuse in certain applications,” Gensler told a global
conference. “We need additional congressional authorities to prevent
transactions, products and platforms from falling between regulatory
cracks.”

Concerns about cryptocurrencies are not limited to the financial and criminal
risks. There are environmental implications to mining crypto, which
depends on vast networks of computers consuming vast amounts of energy.
By verifying transactions and adding blocks to the blockchain, miners can
earn currency themselves. But this resource-intensive activity is sullying
crypto’s reputation, as CNBC reports:

Bitcoin’s poor environmental credentials have made it a controversial asset

Sidi Mohammed Benabdellah University English for Computer Engineering
National School of Applied Sciences-Fez Reading : Cryptocurrency
Info 1 / S1 Pr. KHOUMSSI

at a time when social and environmental responsibility have become top

of mind for investors. In May, Tesla CEO Elon Musk said he would stop
accepting bitcoin for vehicle purchases unless miners transition to more
sustainable energy.

The jury is out on whether people in the future will be buying their
groceries with Bitcoin. Perhaps cryptocurrencies will not become a common
medium of exchange but just a form of investment. Besides, there are
certainly many investors thinking now is the time to jump on the
bandwagon if you want to make a killing. But will it last? Will the
investment pay off? According to Stuff.com:

The basic premise of cryptocurrencies that there will only ever be a limited
amount, is simply not true. Bitcoin may have a finite number of coins
mined, but other cryptocurrencies are popping up all the time. And some
major ones, like Ethereum, have a potentially unlimited supply. While
membership to one crypto club, bitcoin, might be restricted, if there are
other similar clubs opening up down the road, how can it stay exclusive?
When there are tons of something around, it is usually not worth much.