Once dismissed as a fringe interest of tech evangelists, digital currencies have skyrocketed into mainstream popularity and trillion dollar valuations. But what does this surge say about our broader view of money?
Cryptocurrencies use complex encryption to verify transactions and record them on public ledgers. Their prices fluctuate wildly, driven by speculation and supply and demand. They also require substantial computer power to mine, which can cause environmental impacts and raise energy costs for consumers.
Proponents say cryptocurrencies can be used to store value privately and transfer funds quickly, even across borders, without the need for a central authority. But they’re increasingly used to fund criminal activities, such as ransomware attacks and the trading of illegal drugs on darknet markets. Governments around the world have cracked down on these illicit markets and begun to regulate cryptocurrency trading.
The growth of cryptocurrencies has also drawn the attention of traditionally risk-averse financial players, such as mutual fund companies. But the sector remains rife with fraud, market volatility and regulatory challenges.
As more people invest in cryptocurrencies, the industry is transforming from an asset class for the “uber rich” into a more diverse investor base. But this evolution highlights how much trust, standards and seamless connections still matter in the broader global financial system, where most of the world’s monetary value still resides. In 2024, bitcoin surged to a new high as the first cryptocurrency ETFs were approved, and a more mature crypto industry emerged with innovations that may shift it toward institutional uses and unlock cash deposits.