The Unstoppable Spread of Cryptocurrencies

While many people are still watching the value of their favorite cryptocurrency dip and soar, a process of little significance given that this depends on price setting processes, all the signs are that their adoption around the world is unstoppable.

Supporters of the use of cryptocurrencies are now a growing force in influencing their regulation in the US Congress, which is now debating their future. In some countries, the use of cryptocurrencies, in many cases as an alternative to weak national currencies, is growing fast, leading some governments to consider restricting their use. China, which triggered an earthquake that hit the value of bitcoin in July after it closed around 90% of the country’s mining capacity, is primarily concerned about control: Beijing is fully committed to a future based on cryptocurrencies, but only if it can oversee them, squaring a circle that looks increasingly difficult: for the moment everything seems to point to the central bank issuing a digital currency (Central Bank Digital Currency, or CBDC), a move that is surely destined to give it an intermediary role in the overall global adoption process.

Given the lack of regulation, issuing a cryptocurrency is still relatively simple, as can be seen from dodgy projects like Dogecoin, which has boosted the profitsof a company like Robinhood and is now the so-called meme stock of the day. Soccer clubs like PSG have also begun issuing their own cryptocurrencies, offering them to their fans and to finance transfer fees. We are seeing clear signs of progress in an adoption process where the size of the institutions involved makes it increasingly difficult to consider drastic measures by any government to influence a process over which they have no control: at the moment, 55% of the world’s top one hundred banks already have a significant exposure to bitcoin and cryptocurrencies.

At the same time, the two most significant cryptocurrencies, bitcoin and ethereum, are being modified to make them more energy efficient and reduce the role of mining: Taproot brings greater privacy and transaction efficiency and enables its use in so-called smart contracts, while Ethereum’s London hard fork, after changing its consensus mechanism from proof of work to proof of stake, will manage to reduce the energy consumption of its network to a thousandth part, offering a much higher transaction processing capacity, and reducing the incentive for miners, which in the final analysis could reduce supply and even turn it into a deflationary currency.

Take the time to understand what cryptocurrencies are and how they work, otherwise stick to superficial analyses about volatility or alleged pyramid schemes. We are witnessing the digital transformation of money, which will lead us to a completely universalized economy, far removed from arbitrary government controls and making much more sense in a hyperconnected world. A value proposition and an unstoppable adoption process.

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This post was previously published on Medium.

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