It might not have escaped your attention that the news has been full of Crypto business failures, such as the FTX scandal.
So, rather than going in to a complex and detailed explanation of crypto currencies, I think it’s better to explain the phenomenon in language that’s easier to comprehend.
You have several choices of how to hold your digital money, in this case to hold the plethora of crypto currencies. You can hold them in a hard wallet, which is a physical electronic hard drive. You can hold them using an app on your phone or computer, which is termed a soft wallet, however, many less sophisticated people prefer the ease of a Crypto exchange which holds your digital assets for you, a bit like a bank.
Like banks, if too many people withdraw assets from the crypto exchange, it causes a run and a possibility the exchange fails, and this has occurred many times already. This is a very young market and the main issues it faces is the lack of solid regulation, so many have acted like Ponzi schemes and total losses have occurred. This has led to many people wanting to control their crypto assets in their own hard or soft wallets, rather than using a third party. These exchanges have also lent out crypto like a bank lends currency, and so they face the same myriad problems faced with traditional banking.
So, what’s the future of crypto? I suspect it will need to have an agreed framework of regulation, and considering the power of the banks, no new crypto will now be able to get off the ground. My personal guess is that most crypto will fail, leaving a small number of big players, such as Bitcoin and XRP, left in play. Only time will tell if the public continues to accept these, but if governments try to enforce a Central Bank Digital Currency on their populace (CBDC), then I expect they will gain in popularity as a way of protecting yourself from an abusive state, watching every purchase you make and switching off your money if you spend it on the things, they don’t want you to.
So, the end of decentralised money isn’t here yet, mainly because distrust in banks and governments is at an all time high, and so it should be. Let’s be in no doubt that the wars and inflation we see don’t happen without governments and banks creating and funding them, no wonder so many want to move to an alternative system from one so abusive to humanity.
How do you hold your crypto currency?