Interest in cryptocurrencies reignited during the pandemic, driven in part by trillions of dollars in stimulus money that left many investors with “free money” to put to work. And while bitcoin recently tumbled nearly 55 percent from its peak, it remains the most valuable crypto asset in the world, with a market capitalization of around $589 billion. Its investors argue that it’s still a safer bet than stocks during this period of economic upheaval.
A renewed interest in cryptocurrencies — digital currencies that rely on blockchain technology, in which transactions are verified and records maintained by a decentralized system that uses cryptography — is widespread. Large corporations like Tesla, Mass Mutual and KPMG Canada have announced plans to hold cryptocurrency assets in treasury or accept them as payment. Meanwhile, major financial institutions are offering customers more digital asset investment options. Twelve years after bitcoin’s birth, mainstream investors are honing in on the currency, too.
In the midst of this market fascination, a fundamental question still remains. What exactly is cryptocurrency, and why should we care? And what about other industry buzzwords, like blockchain, decentralized exchanges or non-fungible tokens (NFTs)? Are they all just fads that will fade away?
Some have called cryptocurrency a Ponzi scheme, a tool for illicit activities, or a short-term fascination that will be irrelevant in a few years. It’s an understandable…
