Crypto explained and why every Dogecoin has its day | FT

looking for clues that maybe markets are getting a bit bubbly well look no further than cryptocurrencies where a token designed as a joke about a dog on the internet is now worth billions of dollars but that doesn't make a huge amount of sense to us either but here's a rundown of the basics so why is everyone talking about cryptocurrencies suddenly everyone from investment banks to central banks and cab drivers has an opinion on crypto arguably the most speculative asset class on the planet and definitely one of the most divisive that's because the price of these digital tokens something between a currency and commodity shot so high that the establishment can no longer ignore it bitcoin the biggest of the bunch started 2021 on a tear but it more than doubled in price from there to reach a record 000 a pop in april before a fierce pullback bitcoin operates outside traditional financial markets and its supply is not controlled by central banks instead computers verify and record transactions on blockchain technology largely without regulation once mined coins are stored in digital wallets and are traded either privately or on specialized exchanges like coinbase the value of bitcoins in circulation has boomed to around 700 billion dollars luring in amateurs and some professional investors and prompting banks to launch a range of crypto services but thousands of cryptocurrencies typically called altcoins are also out there ether which trades on the ethereum network is one of the biggest and it seems a serious challenger to bitcoin's dominance regulators have struggled to keep pace with the rapid growth but some are catching up in countries including china the us and south korea some central banks are considering launching central bank digital currencies that could quickly wipe out some of crypto's supposed benefits what are stable coins stable coins such as tether and usd coin are designed to be a safe place for cryptocurrency investors to stash their cash many are linked to the price of traditional or fiat currencies like the us dollar or to other digital coins think of them kind of like a crypto version of a bank account the idea is that the money you place in these coins is stable and secure hence the name here's the problem stable coins are largely unregulated in most major markets and come with few if any investor protections many industry participants say they're working to produce audited financials on the reserves that back their coins but at the moment few offer extensive accounting tether which has around 60 billion dollars worth of coins in circulation was fined earlier this year in new york over allegations that lied about its reserves it did not admit or deny wrongdoing the icing on the cake well cryptocurrency mining takes a lot of electricity more electricity than some small countries use think the kind of size of sweden or pakistan central banks are starting to pay attention to this but it's not going away

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