Is Cryptocurrency Really the Future of Money?

Bitcoin is a form of electronic cash, or cryptocurrency, that was introduced in 2009. The first of its kind, it sparked a cryptocurrency revolution. More than a thousand new cryptocurrencies have been created since then, including popular alternatives Ethereum, Dash, Monero and Ripple. Like Bitcoin, they are incredibly volatile, which means their value rise and falls dramatically, sometimes even throughout a single day.

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The first reported payment using Bitcoin was for two Papa John’s pizzas for 10,000 bitcoins in 2010, equivalent to about $25 then. Today, 10,000 bitcoin would be worth more than $60 million!

Bitcoin’s popularity is partly due to the nature of the payment system, which is anonymous,  decentralized and can be used across borders. In contrast to online payment systems like Paypal, personal identities are not directly traceable on the Bitcoin network, making it an ideal method to buy illegal items online, like drugs and weapons. One study estimates that around half of all transactions using Bitcoin are for illegal goods and services.

This also makes it pretty difficult to gather reliable information on who and where Bitcoin is actually used. And although the data varies widely, the most reliable research to date estimates that nowadays over three million people worldwide actively use cryptocurrencies.

The total number of transactions is disputed, however researchers have developed complicated models to estimate activity on Bitcoin and other cryptocurrency networks. One study from 2016 found that activities on Bitcoin have evolved over the years; illegal trade and online gambling activities were dominant in the early days (2010-2013), while investments and other legal activities have recently become more common with growing awareness and trust of  cryptocurrencies.

The charts below show estimates on how much Bitcoin and other cryptocurrencies are worth and roughly how many people use them worldwide.