As investments, cryptocurrency and blockchain are growing increasingly popular

Cryptocurrency and blockchain technologies are getting more popular, but one expert is concerned about their long-term viability.

There is no doubt that cryptocurrencies and blockchain technologies are becoming more mainstream as a result of the Bitcoin rise and success.

Investors in cryptocurrency, notably Bitcoin and Ethereum, have recently seen their investments pay off, and this trend is expected to continue on the stock market.

Thanasis Stengos, an economics professor at the University of Guelph, believes that, despite the rising interest in cryptocurrency, he does not see it becoming a more widespread currency that governments will adopt any time soon.

"This began out with Bitcoin in particular as a potential alternative to the conventional currencies that exist," he explained, adding that "one thing that is in some ways favourable for the idea is some kind of universal type of money accepted by everyone without having to go through exchange rates." The primary impediment that remains and will never be removed is that currency is printed and issued by central banks and governments. They essentially do this to maintain control over monetary policy. This policy is one of the primary tools for regulating the economy throughout expansions and contractions."

Stengos stated that because governments utilise monetary policy to regulate the economy, he does not envision their ceding power in order to promote a cryptocurrency as the preferred currency.

"Crypto can be used by individuals to transact, generally by people who want to avoid the government's checks and balances of controls through banks that restrict how much money they have in their accounts." Without an intermediary bank to record your crypto transactions, the notion here would be something completely out of control. Things would essentially be untraceable. The issue here is how to ensure that a transaction takes occur and that it is transparent. Stengos inquired. "This is where the blockchain concept comes in, because everyone involved in the process confirms the transaction."

According to Stengos, having to confirm every transaction through the blockchain places a high processing burden on the system.

"When it comes to computational speaking, the problem becomes immensely difficult." "The processing power requirements for handling and recording these transactions are tremendous," he said, adding that "if you go to a currency with crypto, you want it to be scarce at first." You don't want it to overwhelm the market with digital currencies and monies, as they would lose value. One of the primary features of digital currency's initial design is to create a finite supply that is governed by the need to address a problem. The greater the number of persons engaged, the more difficult the problem would become. The solution to that problem is essentially to run computers for an extended period of time in order to tackle these challenges."

Stengos stated that when digital currency, such as Bitcoin, first entered the market, the problems were simple and the benefits were greater.

"At first, one Bitcoin was worth a few cents; it was nothing." Of course, it's now a speculative asset. People speculate on whether the price will rise or fall. At the end of the day, given the proliferation of digital currencies, they now compete with one another. Bitcoin is presently undoubtedly one of the most common and secure digital currencies on the market."

Bitcoin and Ethereum are the two most popular digital currencies that have gained traction. According to Stengos, the energy requirements for the verification and harvesting processes have put a significant burden on the energy requirements that were not anticipated when digital money was originally launched.

"These things actually get to increase the demands on energy to harvest new currencies dramatically." Countries are beginning to control and believe that alternative and payment schemes would never be able to replace the main currencies. However, they are being utilised to exchange items."

El Salvador is the first country to make cryptocurrency official tender. Despite making that shift, the country has been plagued by transactional difficulties.

"It embraced Bitcoin as a main currency, and this is as foolish as it gets," Stengos said, adding that "people who have Bitcoins in El Salvador sought to convert them because they felt they would lose their value." It's the opposite; you'd assume that as Bitcoin became more stable, people would want more of it. The exact reverse is true. You wouldn't want to go to the Beer Shop or the grocery store with money that has lost its value or fluctuates wildly. There is a lot of uncertainty, and it would never be the currency's standard of exchange that we would expect."

NFTs, or non-fungible tokens, are the most popular goods being swapped by digital money right now.

NFTs — essentially a tool that uses blockchain technology to provide proof of ownership of a digital asset such as an image, audio clip, or tweet — are currently a fringe item used primarily by tech enthusiasts and artists, but experts say the tokens' potential uses are nearly limitless, including the proof of ownership of assets such as cars or real estate, or just about anything of value.

A non-fungible token is confirmed on the blockchain (the same technology that assures the security of cryptocurrencies such as Bitcoin), and whoever has the NFT is considered the asset's original owner.

Many individuals have already invested in crypto and blockchain, according to Stengos, but he feels blockchain technology will be a more reliable investment.

"Like any investment, when more people get into it, you go out," he explained. "The blockchain is not a fad because it's a practical technology." Nobody talks about blockchain; only cryptocurrencies are discussed. Blockchain has resulted in cryptocurrency. Nobody discusses the underlying technological improvements made possible by blockchain. "I'd take the technology over anything," he replied.

Stengos advised that if people want to take chances, they should do it with things they understand.

"Go for it if you comprehend the object for which you are taking a risk." Some individuals are unfamiliar with crypto and what it entails. There are many more cryptos, so why would you choose one over another?" he wondered.

According to Stengos, businesses are looking to use blockchain technology to streamline procedures.

"What blockchains do is incredibly brilliant," he remarked, adding that "the most essential use resides in contract verification in law, legal concerns." I believe it will be widely used in any transaction involving multiple players who need to verify contract specifics. Because it has proven to be valuable, technology is here to stay. "I don't grasp the product of it via cryptocurrencies," he explained.

Stengos emphasises that blockchain and cryptocurrencies are not the same thing, and that people frequently mix them together.

"You have something that is produced on the back of something else that is highly beneficial but not relevant to many other things," he explained.

There have been initiatives in the United States to regulate cryptocurrencies, but nothing has been regulated as of yet.

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