A recent Technician column written by Laura Villegas criticized cryptocurrencies, stating that they were “not currency,” and instead calling them a “crypto-bet.” Though the risks of investing in Bitcoin and other cryptocurrencies are high, the truth is that they are indeed currencies, and may hold the promise of a reliable economy in the future.

Let’s begin with a definition of cryptocurrency. Merriam Webster defines cryptocurrency as “any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions.” 

Bitcoin was the first cryptocurrency created, but others exist as well, like Ethereum, Litecoin, DASH, Monero and many smaller cryptocurrencies. Since cryptocurrencies operate outside the traditional financial system, it is only possible to “invest” in them through some sort of exchange. Coinbase, for example, a U.S. Bitcoin exchange, holds a substantial amount of the currency, and will exchange U.S. Dollars for Bitcoins. 

When Bitcoin was first created, nobody really knew much about it or cared much. You could buy thousands of Bitcoins for pennies. The value of Bitcoin, as well as most other cryptocurrencies, is directly tied to what people believe it is worth. As Bitcoin gained in popularity, people cared more about it, and thus, were willing to pay more for it.

As a result, the price began to climb. In early 2011, one Bitcoin was equivalent to one U.S. dollar. In 2013, one Bitcoin topped the $1,000 mark, before quickly falling. In recent months, Bitcoin has topped more than $17,000 per single coin, which has drawn significant interest from investors, professional and amateur alike. Just think: if you had invested $60 into Bitcoin in 2011, you could be a millionaire today!

Unfortunately, it isn’t that easy. The value of Bitcoin, indeed most cryptocurrencies, has fluctuated wildly over its lifetime. After topping $17,000 in 2017, Bitcoin lost a third of its value in 24 hours. This has caused many people, including everyone from economists to media personalities, to call Bitcoin and related cryptocurrencies “a scam.”

Indeed, as a reliable store of value today, most cryptocurrencies are a risky bet to take. That is, however, not the point.

One reason cryptocurrencies were created was in order to avoid centralized control of a currency. Bitcoin was designed using a mathematical protocol, meaning that no one person controls it.

Some of the features that drew people to use Bitcoin included semi-anonymity, global transactions and the ability to ensure that it will never be counterfeited. These are all benefits that have drawn people to use Bitcoin instead of, or in addition to, the normal currency created by a government.

Bitcoin has a number of problems right now, including high transaction fees, market speculation, and an extremely unreliable exchange rate. The fact remains, however, that cryptocurrencies in general, though they are currently a young idea, hold immense promise to solve problems in the future. To build a global network of transactions free of corruption is a noble goal.

Cryptocurrencies such as Ethereum have teams of smart people trying to solve the problems found in cryptocurrencies like Bitcoin, such as the ability to handle more transactions, to have lower fees and to be more democratic. Though investing in cryptocurrencies today is risky, the promise that they hold to revolutionize the global financial system cannot be ignored.

If you want to get involved, there are great resources on the internet to learn more about cryptocurrencies. Do an internet search for “how does Bitcoin work,” or sign up for a U.S. Exchange, such as Coinbase, if you’re interested in learning more. Today, cryptocurrencies are very risky, and you should not invest more than you are prepared to lose, but it can feel good to be a part of the future.  

The above references an opinion and is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

Sam Weaver is a second-year studying Computer Science.