While Soulja Boy may say life is “all about the paper,” a new trend has taken many online marketplaces to use a less tangible form of currency.
Bitcoin and other “cryptocurrencies” have become a popular alternative for many, offering users more anonymity and privacy compared to the way most currencies work today.
And with bitcoin eclipsing $100 billion in value last year, the financial world has taken notice.
“Bitcoin’s recent surge can be attributed to a multitude of factors,” Ryan Rabagalia, head trader for Octagon Strategy told Forbes. “None are quite as evident as the astounding amount of attention it’s getting in the media.”
Bitcoin has become known for two things: wildly fluctuating prices and illegal drug use.
The cryptocurrency has been a favorite for years among darknet communities, sites that exist off of Google’s registry, as customers are able to almost completely anonymously purchase drugs, weapons, or just bootleg games and soundtracks without leaving a digital footprint. The air of mystery around bitcoin extends all the way to the still unknown creator, going by the name “Satoshi Nakamoto.” And just this week, the currency took a huge nose dive, dropping 14 percent in value in just a few days.
Sites like SilkRoad and other “online bazaars” cashed in on the opportunity, driving demand for bitcoin in the first few years of its inception.
But with rising demand for privacy in an ever-expanding surveillance state, bitcoin and others have seen new levels of interest and popularity.
Some in the banking world aren’t as excited about this attention. Mexican economist Agustín Carstens has been a harsh critic of the new trend.
“If authorities do not act preemptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability,” he warned in an interview with The Guardian. “There is a strong case for policy intervention. Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act.”
He went on to describe these forms of currency as a “Ponzi scheme.”
The uncertainty surrounding these forms of currency is holding many Cal State Long Beach students back from taking the plunge.
“I’m more on the safe side on things,” said Karen Gonzalez, a sophomore studying speech language pathology. “So once it’s been around, or if its the only way to invest money, then I think I would.”
Others worry about the security of relying on an online system.
“It’s very sensitive information, and in the blink of an eye it can be lost,” said Adrian Morlett, a sophomore industrial design major. “I would rather have a physical copy of my money rather than have it in the cloud.”