With the investing world in turmoil, many look to cryptocurrency as a financial savior. Yet the complex digital currency remains one of the most volatile financial assets of the century.
The general populous has only been exposed to crypto in the past few years, but the first digital currency appeared in 1990 under the moniker
DigiCash could be likened to PayPal or Venmo. It was a way to transfer traditional cash into electronically movable money, and it brought currency to the digital realm.
When Bitcoin appeared on the internet in 2009, it was easy for many to write it off as another PayPal clone. Yet Bitcoin did something that had never been done before — blockchain.
A blockchain is essentially a container with “blocks” of information. In the case of Bitcoin, it contains information on every transaction. This information is stored in a decentralized network across the personal computers of Bitcoin investors. In this way, no one person or organization controls the ecosystem. Many believers in the capitalist system find this feature incredibly attractive and chose to invest their wealth in cryptocurrency over a traditional 401K.
Yet this feature is also cryptocurrency’s worst enemy. Marc Weniger, professor of business, said that although he believes cryptocurrency will remain influential in the market, it is a dangerous investment.
“Cryptocurrency is a very volatile market,” Weniger said. “The reasons the market moves is highly predicated on speculation. This makes it difficult to invest in successfully. Unlike the stock market that has actual assets and known company financials behind the stock prices, cryptocurrency is all digital and difficult to evaluate the true worth of the (asset).”
The volatility of crypto may make it an undesirable investment for students. Caleb Chong, sophomore graphic design major, recently invested in GameStop during its historic spike in value. Yet even Chong is uncertain about investing in cryptocurrency.
“Ever since the surge of Bitcoin, it seems that crypto is seen as a lottery to be won,” Chong said. “When I invest I generally like to invest long-term, things that slowly go up in a very stable manner, and cryptos at this point seem like the opposite of that.”
For some students, the internet culture surrounding cryptocurrency is enough to be excited. Corban Murray, sophomore international business major, bought $3 worth of Dogecoin for the “memes.” Was it worth it?
“Absolutely,” Murray said.