Cryptocurrencies are really making a fuss in the news lately. Not just because Bitcoin is constantly reaching record highs. Cryptocurrencies pose big problems for governments and banks across the globe. Why? The fear is that they allow people to trade with a certain level on anonymity, making it difficult for governments to tax income. They also remove the need for banks to keep track of transactions and records, since all Blockchain records are public.
The obvious problem with this is Money Laundering, though that's only an issue when a Central Bank or Government is involved. In terms of the every day person, it's a beautiful thing. No one other than you and the person you are trading with is involved in those transactions. There isn't a central agency that can dictate the value of your currency to you.
I'd like to keep the political arguments aside and look purely at how this idea could possibly shape our culture and how we view the value of trading with each other. A Cryptocurrency would allow people to trade their goods and services based on an agreed upon value in that currency.
A painting that is worth fifty space bucks to one person, may not be worth anything to another. That's the point of currency. Yet central banks and governments do everything they can to regulate currencies and how much of it is available. This effects the overall value of your currency, even if you didn't agree to those changes in that system.
Blockchains in themselves are a wonderful revolution in computing. Allowing for transparency within the currency market(no one can just make more), while also allowing a level on anonymity to purchasers and sellers alike. It also reduces fees on the every day person for services that are now essentially unneeded(tellers, physical stores, intranets for banking systems). This reduces the overall resources needed to run the system. That leaves more resources with us as a people to fix our other problems.
Government fears the use of Cryptocurrencies for Money Laundering, however that's pretty short sighted. Money laundering can happen in a multitude of different ways. A vast majority of big players in the economy are finding ways to reduce the amount of tax burden on them personally already. Could Cryptocurrencies crash the global economy? Sure. If you hold on to the outdated system that Cryptocurrencies are trying to replace.
How many resources are wasted on shoving our entire monetary system through a centralized funnel? How much more could we as people do if we had control of our own funds in such a way? The IRS reported $11.7Billion as their overall costs for 2016. According to taxfoundation.org, it will cost Americans alone $409Billion in time and money to comply with tax code.
With Trillions of dollars being wired through electronic systems every day, Cryptocurrencies will have to replace a lot of infrastructure over time to truly remove the need for a central bank. Is that any time soon? I have no idea. But with so many different types of "Coin" systems surfacing, who's to say that one specific coin will dominate the market?
Is it possible we will trade in ArtCoins for art based products? FoodCoins for groceries? TaxCoins even could be created for those who still wish to support a government system. If we could convert any old coin into TaxCoins and send them to a specific department based on what we feel should be funded, would the government embrace that philosophy?
Is it possible to have a Voluntary tax system that actually works? I can't begin to speculate a real possible answer. I can however say that regardless of what happens to the government side of things, Cryptocurrencies are going to take a big place in our every day life as the future steadily creeps towards the present.
I believe the Bitcoin hype is taking away an important message about Cryptocurrencies in general. Yes, Bitcoin is worth a lot right now. However, that won't last forever. Not just because it will only ever create so many coins. Not just because the intrinsic value of a Bitcoin has become hyper-inflated based on politics. No currency should be tied to any level of political activism.
At least there's other options, which I highly encourage everyone to explore and do their best to understand. This is some pretty cool happenings in our life time. Blockchains are something I don't think even the Sci-Fi community really saw coming in it's full applications. It always makes me happy when reality is cooler than fiction!