According to a survey published by the University of Chicago, 13 percent of Americans bought or traded cryptocurrency in the past 12 months. This is compared to 24 percent of Americans who invested in stocks during the same time period (1). Cryptocurrency is emerging as a huge investment type for many individual and institutional investors. And while it is yet to truly become a currency type, interest in cryptocurrency is at an all time high with huge financial firms such as Fidelity, Bank of America, BNY Mellon and many others having shown interest in providing cryptocurrency services. Additionally, on April 14 of this year, American cryptocurrency exchange Coinbase went public with a valuation of around $86 Billion (2). With cryptocurrency on the rise and continuing to rise, future working class professionals such as ourselves should be extremely aware of the current movements in the space, as they may strongly impact the economic world that we may find ourselves in within the next decade.
This summer saw huge movements in the cryptocurrency space as many investors looked at cryptocurrency as a way to hedge against inflation that could drastically increase as a result of the fed’s response to the COVID-19 pandemic. Investors across the United States and the globe began trading, investing in, and holding cryptocurrency as an alternative investment type as a way to diversify their portfolio. And while cryptocurrency remains to primarily be an investment type rather than an actual currency, stores accepting cryptocurrency as a type of payment continue to rise. Additionally, governments across the globe are pondering what exactly should be done with cryptocurrency and how to tax cryptocurrency gains, transfers or other financial activity completed with cryptocurrency.
One nation in particular has taken an extremely unique perspective on cryptocurrency. In June of this year, El Salvador’s President Nayib Bukele announced that as of September 7, Bitcoin would be legal tender in the nation (3). This is done partly in an effort to decrease the nation’s heavy reliance on the US Dollar. This step taken by the El Salvadoran government is a major step towards increasing the legitimacy of Bitcoin and other cryptocurrencies. As many other governments look to recover after the pandemic, cryptocurrency as a transfer of value method may become a legitimate currency in many other developing nations who rely on the United States Dollar.
For those unfamiliar with Bitcoin, Bitcoin is considered to be the “father” of all cryptocurrencies because of its status as the oldest and most established cryptocurrency. According to cryptocurrency data website Coinmarketcap, Bitcoin currently has a market cap of $914 Billion. This is a higher market cap than companies such as Tesla, Visa, and Walmart (4). As of the time of writing, the total cryptocurrency market cap is $2.1 Trillion. For reference, Apple has a valuation of $2.5 Trillion. Currently, the top cryptocurrencies by market cap are Bitcoin, Ethereum, Cardano, Binance Coin, and USD Tether. Each cryptocurrency is unique and while some serve similar purposes, they all have a unique niche and community that invest and utilize the network.
As Bitcoin and cryptocurrency continue to surge in value and popularity, I would encourage everyone to keep a close eye on the cryptocurrency market. Although crypto remains to be a somewhat niche financial sector, the interest shown by huge banks and institutions should pique your interests. Additionally, some cryptocurrency companies are already paying salaries in cryptocurrency. So, who knows, you might find your paystub noted in BTC rather than USD.