Fueled by the rise of Bitcoin, cryptocurrencies are enjoying increased exposure that is beginning to swell outside of just the financial media, whom it has intrigued all year.
Concerns have been raised about the potential for Bitcoin itself to be used for shady operations, yet its rise has been irresistible thus far, as it broke the $1,000 value mark last month and sees more vendors accepting payments in that form. As a result, the term crytocurrency is also beginning to spread into popular terminology, as journalists and the public rush to wrap their heads around the concept.
The Rise of the Cryptocurrency
Bitcoin isn’t the only cryptocurrency. At least, it isn’t now that hundreds of alternatives have sprung up in its wake. This is always the case when a popular trend combines with the potential to make money, but in this instance the fusion of finance and technology has occurred so quickly that many in the mainstream have been left behind.
Not only is the need to cover cryptocurrencies becoming a prime concern, the prerequisite need to comprehend them is fueling widespread coverage of the underlying principles. What started out as a groundswell of interest – and often dismissal – in the financial media has been forced out into the mainstream by the continued surge rise of Bitcoin, and the copycat cryptocurrencies that are springing up to ride its coattails.
A crucial factor in establishing this interest has been validation from established businesses, some of which have helped to offset the aforementioned concerns that these digitally-based forms of compensation will be limited to niche online and/or criminal transactions. From budget travel via CheapAir.com and a university education, to Richard Branson’s aspiring space travel service Virgin Galactic, developing a base of real-world places to spend these increasingly valuable Bitcoins is clearly helping it to hit the wider headlines.
While the rise has been accompanied by plenty of positive press, the negatives are equally frequent as a clear call to remain cautious. More than $1 million stolen from a Bitcoin bank last month is just one such warning and a reminder that rising value also means rising risk, not only of theft but also the potential for boom to turn to bust.
What Next for Cryptocurrencies?
With widespread coverage comes the inevitable analysis of the future for this new and accordingly volatile form of currency. These range from tacit acceptance for the role of cryptocurrencies in online transactions, but no further, to outright condemnation to failure.
At the very least, continued interest and high profile support should keep the Bitcoin bubble floating for the short term, as well as boosting some of the more popular alternatives to competitor status. The real worry for potential investors and businesses buying into the cryptocurrency trend must be for the longer term, focusing on whether or not any one name can make the perilous journey from flavor of the month to a foundation of confident, diverse transactions.
On the latter point, Bitcoin has shown that it can weather a storm but the seas around it continue to be turbulent, threatening its longevity. One too many thefts or Silk Road-style controversies could sink the ship for good. Whether or not this would sink the cryptocurrency as a wider phenomenon it’s too early to tell, but the dangers are there for all to see and supporters will need to be in ‘risk-on’ mode for the foreseeable future, if Bitcoin and its ilk are to continue riding the current wave.
And, if nothing else, the phenomenon has at least spawned this catchy little holiday parody on Rudolph the Red-Nosed Reindeer… enjoy!
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