Although Bitcoin's value has dropped significantly in recent months, people still see crypto as a suitable investment. “The hype is far from over," says Zeisberger. Among investors, he says, many have gone in without much knowledge and based on success stories, perhaps out of fear of missing the boat.
In addition to those who see Bitcoin and other coins as suitable investments, some crypto-enthusiasts believe crypto can be the currency of the future. “An often mentioned advantage is that there would be no need for parties like a central bank to regulate the circulation of the currency. And that could prevent problems like inflation.” Incidentally, the supposed link between central banks putting money into circulation and inflation has proven to be quite weak.
Silent death or perished by its success
At the moment, cryptocurrencies may be an interesting investment for many people, but truly useful applications are still lacking. “We can pay with our phones here, send someone a Tikkie, use a credit card or checkout via iDEAL. There is little need to pay with Bitcoin.” In places where financial security is less certain, however, cryptocurrencies can provide a solution, Zeisberger emphasizes. “Think, for example, of countries where financial transactions do not always run smoothly because not everyone has access to a bank. With just a smartphone, people in these countries can have access to their crypto coins.”
Another problem for the future of cryptocurrencies is that governments and central banks have no interest in a financial system with no regulators. “In China, mining Bitcoin is already banned, and should crypto coins become more popular, similar measures could be taken elsewhere. In addition, central banks may come up with their own crypto coins. Therefore, I think there is a good chance that Bitcoin and other cryptocurrencies will either perish from their success or die a silent death.”
Blockchain does show promise
Although Zeisberger is not very optimistic about the future of cryptocurrencies, he does see potential in blockchain, the technology that underlies cryptocurrencies such as Bitcoin. “While financial transactions don't have to be much more efficient in many countries, other types of transactions can be made easier. With the smart contracts that you can conclude based on the blockchain, a central authority is no longer necessary. In theory, you could buy a house without having to go to the notary, because the agreement has already been recorded in a digital contract.”
This article was written in response to a question from a Radboud Recharge reader. More answers to reader questions can be found by using in our summer special.
Photo: Maxim Hopman via Unsplash