Even major banks such as Goldman Sachs and Morgan Stanley are getting into the game. Investment funds in bitcoin and other cryptocurrencies have proliferated. ![]() 2 Cryptocurrencies are a good investment. The value of a single coin almost immediately plummeted. A Chinese crackdown on cryptocurrencies then briefly took another one-third off the price in just one day. Recently, Elon Musk announced that Tesla would no longer accept bitcoin as a form of payment, reversing a policy it had implemented earlier in the year. Even on a calmer, more typical day, the value of a major cryptocurrency such as Ethereum might fluctuate by 10 percent or more, making it too unstable to be practical. It is as though a $10 bill could buy you just a cup of coffee one day and a lavish meal at a fancy restaurant just a few weeks later. It tripled in the next two weeks and then fell to half that peak value ten days later. In late April, the price of a Dogecoin was 20 cents. Moreover, wild swings in the values of most cryptocurrencies make them unreliable as a means of payment. Ethereum, the second-largest cryptocurrency, processes transactions slightly faster but also has high fees. It takes about 10 minutes for a bitcoin transaction to be validated, and the average fee for just one transaction was recently about $20. ![]() In fact, it has become very expensive and slow to conduct transactions using cryptocurrencies. ![]() ![]() The website Pymnts claims, “Blockchain IS the future of the payments industry,” a reference to the computational technology that undergirds cryptocurrencies. The bitcoin white paper, which set off the cryptocurrency revolution, envisions an electronic payment system that allows “any two willing parties to transact directly with each other without the need for a trusted third party,” cutting governments and banks out of the financial loop. 1 A cryptocurrency is real money that can be used for payments.Ĭryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards or checks.
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