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Cryptocurrency's Usage Exploding Worldwide

Bitcoin Pixabay
Bitcoin is only one of thousands of kinds of cryptocurrency.

The use of cryptocurrency such as Bitcoin (and thousands of other brands) is growing exponentially even while many barely know of its existence.

Cryptocurrency has been mentioned with increasing frequency in public and financial forums in recent years, yet while actually millions of Americans have begun using and investing in it, many still don’t know what it is, and wonder what it’s about.

Former University of South Carolina finance professor Jimmie Lenz has a simple way to define the new financial format.

“Cryptocurrency, I like to tell people, is really not that much different from cash at the end of the day, except that your wallet is electronic. And so it lives in a virtual space. And it can be used in similar ways, although because it’s electronic, it has the ability to be used across the world.”

The largest and most commonly known type of cryptocurrency is Bitcoin. According to Rob Viglione, CEO of software developer Horizen Labs and a recent USC Ph.D. graduate, Bitcoin and other cryptocurrencies are useful in many applications, but are of special value to people in unstable political environments.

“You see Bitcoin and cryptocurrencies proliferate widely in countries like Venezuela, because their economies are so screwed up and their political environment is so screwed up that people are looking for alternatives outside of the government currency, which is pretty bad,” he said. “In countries like the U.S. and Western Europe where we have very stable financial and capital markets, the marginal value for using cryptocurrency is lower. There are large sections of the world for which Bitcoin and other cryptocurrencies are kind of a lifesaver, if you live in countries that are more volatile.”

Cryptocurrency was introduced to the world in 2009, and in the dozen years since, literally thousands of cryptocurrencies have appeared, and their use is growing exponentially, said Viglione. “There are tens of thousands of businesses around the world today that accept and make use of cryptocurrencies. We’re talking about a market that has a trillion dollars’ worth of value.”

There are 290 exchanges around the world where cryptocurrency can be bought. A well-known American exchange, Coinbase, had 56 million registered users as of April 2021, according to Viglione.

Cryptocurrency use has numerous advantages, such as instant payment and cutting out middleman fees from banks and other institutions. But both men acknowledged disadvantages as well, the biggest of which is that cryptocurrency is “wildly” volatile, said Viglione. For example, at the time of his interview, he said a Bitcoin was worth about $35,000. A few days later, the Associated Press reported its value at $45,000. It can also go down suddenly as well, Viglione noted. “It’s a really floating marketplace, so every second of every day, 365 days a year, Bitcoin is changing in value, just based on the market.”

Despite this volatility, both men see cryptocurrency as a good investment. It is not tied to the stock or bond markets, according to Viglione. “Everyone ought to have a little bit in their portfolio,” he said. “Just because something’s volatile doesn’t mean you don’t want to add it.”

For anyone considering purchasing cryptocurrency, Lenz had this advice: “Do your homework. Understand what you’re buying. Understand that like any investment, it’s subject to go up, to go down. All cryptocurrencies are not the same. They’re used for different purposes.”

“Don’t put all your eggs in one basket. Diversify,” added Viglione. “You only want to invest as much as you could potentially lose, because these are extremely volatile assets. This is a very important new asset class…but you have to be prudent about how you participate.”

Both men see cryptocurrency continuing to proliferate around the country and the world.

Tut Underwood is producer of South Carolina Focus, a weekly news feature. A native of Alabama, Tut graduated from Auburn University with a BA in Speech Communication. He worked in radio in his hometown before moving to Columbia where he received a Master of Mass Communications degree from the University of South Carolina, and worked for local radio while pursuing his degree. He also worked in television. He was employed as a public information specialist for USC, and became Director of Public Information and Marketing for the South Carolina State Museum. His hobbies include reading, listening to music in a variety of styles and collecting movies and old time radio programs.