So why is crypto currency becoming so popular? Telling people you are into crypto currency has become the new standard of telling people about your vegan-ness or personal crossfit records. To be honest, I might be guilty of this myself. Sorry Alex (my fiancée). To explain why crypto is becoming so popular, I must break down the popularity into two eras. We will call the first era the Sitoshi Era, which started in 2018, and the second era the FOMO Era, which started in 2016.
Sitoshi Era (2008-2015)
In 2008, the world was hit with the worst financial crisis of this century. But what caused this? Well, that’s a bit of a long story. But to keep it short, here is a quick summary of the disaster.
People wanted to keep their money safe, so they put it in banks.
Banks wanted to make money, so they took our money and gave it out as loans.
These loans, were not good loans, and people did not pay them back.
The banks declared for bankruptcy and the government stepped in to bail them out.
The Government used our tax money to pay off the money that the banks lost.
This makes people mad and not trust central authorities.
As a response, a mythical unknown person named Sitoshi Nakamoto published a white paper that described an alternative, decentralized solution to fix this problem. Thus, Bitcoin was created. Great things usually come out of desperate situations. It is not until something is broken until we realize it needs to be fixed; or better yet, a new way to being created. While it is still a mystery on what the early years of bitcoin was used for, many believe the popularity arose by the ability to do illegal things. Because there was no central authority or bank, it was a much better method for criminals to transfer money across the internet.
FOMO Era (2016-Present)
Fast forward 9 years, and we are currently in the FOMO era (Fear of Missing Out). While the principles of a decentralized economy are still a driving force, many people believe that the recent crypto boom is caused by people wanting to make money (not just as a tool for transfer).
In December 2011, you could buy bitcoin for $2. In closing up 2017, bitcoin is worth roughly $20,000. To put that in perspective, if you purchased $100 worth of bitcoin in 2011, today it would be worth $1,000,000.
The recent boom is caused by a lot of things. Social media, speculation, fear of missing out. This is one of the main reasons people believe we could be creating another bubble similar to the dot com bubble of 1999. Regardless of your outlook on the future, crypto currency is growing at a pace this world has never seen.
In our next section we will learn how to make (or lose) money with crypto.