Few things in this world evoke more contrasting emotions as the mere concept of cryptocurrencies. Some fear currencies like bitcoin; others can’t get enough of them. Some see them as the future of business and commerce; others view them as little more than a 21st century fad, set to start collecting dust on a shelf next to yoga pants and fidget spinners. Here’s the thing – they’re all right. They’re also all wrong. Cryptocurrencies are still in their infancy, and understanding the extent of their potential can be like trying to hit a moving target tied to another moving target. Long story short, bitcoin and its many imitators are both teeming with possibility and radically unstable.
So, what are cryptocurrencies? Cryptocurrencies are simply digital currencies that are encoded for added security. Perks like a resistance to counterfeiting, ease of transfer and no inherent ties to governments have cultivated a fanatic following for currencies like bitcoin. Unlike physical currency, which is backed by something tangible, bitcoin and its children are supported by ones and zeros and the enthusiasm of investors. Support for digital assets can be so monumental, in fact, that the current value of bitcoin is up to a whopping 148% from the beginning of this year.
To get a better understanding of what the recent boom means and where bitcoin is headed, meet David Smith, an angel investor, retired startup founder and the man behind Bitcoin Bulls, a Lansing-based online bitcoin investor community.
“I created Bitcoin Bulls in 2014 to share my experiences investing in cryptocurrency, financial products and sharing my returns,” Smith explained. “I’m proud to have helped some newsletter readers to change their lives. One reader wrote to me that he was able to pay off his student loans.”
Smith said that Lansing has been slow to take to the possibilities of cryptocurrencies and that bitcoin has yet to leave a substantial mark on the local economy.
“I suspect there are just a few thousand people in the Lansing area who have realized substantial financial gains from bitcoin investments,” Smith said. “Maybe enough to pay off a house or a car.”
Despite the apprehension, Smith is optimistic when looking at Lansing and bitcoin’s future together: “Digital cash is empowering. I can do what I want with my money whenever I want with low or even no fees. I’m really excited to see the financial empowerment cryptocurrencies will bring to Lansing’s neediest residents over the next five to 10 years.”
For all of the good that can come from bitcoin investments, Smith is quick to highlight bitcoin’s volatility as well. “I do see the upward trend continuing,” he said. “But I don’t recommend or endorse investing in cryptocurrencies.” Smith’s Bitcoin Bulls content serves primarily as guidance to voluntary investors, as opposed to a blatant ad for bitcoin. “Investing in a brand-new technology with wildly fluctuating value and undefined regulations is hard. On top of those risks, scammers and thieves try to rob cryptocurrency holders every day,” Smith said.
Indeed, bitcoin scams have grown with the currency, ranging from fake Internal Revenue Service calls to fully functioning South African operations that bring in $135,000 per day.
Lansing residents looking at bitcoin’s timeline will see a rollicking story of shinning highs and crushing lows.
While daunting at first blush, the new-wave intangible currencies are just like any other game-changing institution: They require respect and knowledge to perfect themselves.
“Bitcoin’s creator, Satoshi Nakamoto, started on an impossible mission: to create digital money and free people around the globe from needing to pay financial institutions hundreds of billions of dollars every year to use their own money,” Smith said. “Each day for the past 10 years, cryptocurrencies have become more stable and closer to realizing Satoshi’s vision. I believe the people working every day around the globe to bring cryptocurrencies mainstream will succeed, just as innovators have done throughout history.”