Technological singularity: the future of cryptocurrency in the global community
By Nikita Kosmin
The recent introduction of cryptocurrency to the world of global banking has cardinally changed our understanding of economy as we know it. Although cryptocurrency has not been born yesterday (introduced by an anonymous avatar by the name of Satoshi Nakamoto in 2009), the jury is still out on the concept of cryptocurrency. A fraction of the market eagerly anticipates a future with new opportunities for unregulated financial activities, whatever that may imply. Another fraction se sees a concept fraught with difficult questions: how can cryptocurrency be regulated? Is it a tax evasion maneuver? Since this is a concept with artificially created demand, can cryptocurrency stocks take a dive overnight as the market crashes and leave its owners with nothing? Can the mysterious creator of Bitcoin control the world’s finances?
As we look at the latest trends in the market of today, which is expanding and evolving faster than even in the history of humankind, we try to make out cause-and-effect sequences that would help clarify the uncertain and at times plain shady relationship between the economy as we used to know it, the mind-blowing concept of 21st century neocurrenncy, and our lives in the upcoming years as a result of these ambiguous and ever-changing patterns.
How Does Cryptocurrency Work?
Since you’re reading this we assume you have a firm grasp on the concept of cryptocurrency, which means we don’t need to go into too much depth about the mechanisms behind it. Long story short, cryptocurrency is an infuriatingly complicated conglomerate of code, which allows secure storage and transactions of funds. In fact, ever since its creation in 2009 the programmers continued working on it, constantly perfecting the code, which means that not only is this a program that is able to protect itself using the latest state-of-the-art encryption software, it is also a system not unlike Sophia the AI Robot, which has a mind of its own and is able to build itself to prevent further vulnerabilities. We also have Satoshi Nakamoto and Sophia to thank for endless panicked fan-made YouTube video improvisations on the Terminator: Rise of The Machines theme.
Joking aside, the new concept of cryptocurrency has the potential of changing the world as we know it, as did the Internet: the flow of cryptofinances, as some governments warn, is completely unregulated, instant, and can serve just about any purpose, from financing terrorist attacks to crashing the world stock market to eliminating world poverty. As the same people who made Sophia the AI Robot at Hanson Robotics release the singularity code, we watch the advances holding our breath.
Does life start to sound like something out of Isaak Azimov? The future is already here. We, of course, understand the uncertainty associated with unprecedented power of cryptocurrency, and the seeming division between different countries as some take a stance for and others — against. While Russia declared it’s getting ready to make a move to completely eradicate all cryptocurrency on its territory, effectively equating it with tax evasion, which is against state law, Dubai’s Minstery of Ecomonics partnered up with UK-outsourced Object Tech Group to create its own cheaper but more see-through digital currency with improved delivery speed, and less waiting times, in October.
Ali Ibrahim, the Deputy Director of Dubai Economy Accelerators, calls the technology “a game-changer”. If harnessed correctly, this tech can allow a country’s economy to make a giant leap — much the same way as sending an email replaced horse-driven carriages that delivered mail in the times of Wild West.
As Dubai seeks to become the world’s first economy which is based on blockchain, we foresee exponential improvements in business transaction times, which means an unprecedented increase in the tempo of production of goods and services, huge increases in trade and military advancements, and a wide field for bountiful scientific discoveries. However, as the rest of the world falls behind, the question still is: what can this power do in the wrong (or just unskilled) hands?
We have already mentioned cryptocurrency starts undergoing a continuous process of advancement once the system goes live. Making chronological software versions redundant, this system works to improve itself real-time as well as being worked on by multiple software engineers, which means that it is one of the safest systems around in terms of technology. However, because Bitcoin is not directly tied to goods and services like “real” currency like dollars and euros, the concern will remain (at least for now) of its stability.
Because it provides quick and strong investment returns, cryptocurrency attracts plenty of investors willing to make easy money fast. However, as cryptocurrency grows, it also falls — and rather quickly, like it did on the 14th of September — by over 30% in two weeks (source). The major problem with Bitcoin is that, because it is not tied to some kind of concrete assets, its further course and worth are something of a gamble. We think it is possible that the future with this currency can result in a lot of frustrated buyers, but, then again, there is a possibility of that with all major banks. The question is whether you are able to do an adequate risk assessment and conclude whether it is worth investing your money in the cryptocurrency in hope for quick and colossal returns. Given immense complexity of the topic, the code, and the ever-changing market with its myriads of factors and players, that decision is becoming increasingly more complicated to make by the day. So how do you make a prognosis?
Latest legal battles aside, this extremely volatile, hard-to-understand, and mesmerizingly fast system of financial management and redistribution of funds has attracted ever-growing numbers of investors, and it keeps on bringing in new members every day, fast making this a global economy issue. As Securities and Exchange Commission in the US equates undeclared cryptocurrency trade with a crime, and cryptofunds with taxable income, we have to ask exactly how each country will deal with the risks of this new way of trading, and in which manner, if any, each state will approach dealing with internal cryptocurrency regulation as well as external factors affecting other economies’ growth.
It logically follows that highly likely there will be a sharp divide between certain countries given that their policies on blockchain are so vastly different, and further questions to do with blockchain regulation within each country’s jurisdiction (plus debates within the European Union on whether cryptocurrency is liable for taxation) mean this is quickly going to become an unpredictable market niche with high impossible risk assessment, which is why we recommend doing as much research as humanly possible on the latest development before making steps in this direction.