Cryptocurrencies like Bitcoin may be somewhat volatile, but nonetheless a Brock University finance professor doesn’t believe the blockchain technology behind them is going away.
Don Cyr, professor of finance at Brock’s Goodman School of Business, has been closely following the cryptocurrency market and calls blockchain technology “revolutionary.”
The technology — essentially a shared record book or database which records transactions — is here to stay, said Cyr, in a media release.
“But it’s hard to say what form (blockchain technology) will take in terms of cryptocurrency and other financial transactions in general.”
Bitcoin is currently the most popular cryptocurrency, though others such as Ethereum — launched in 2013 by a Russian-born Canadian — are becoming serious competitors.
Cyr said the political aspect of governments having little control or regulatory power over digital currencies has helped fuel their growth, but as for which digital currencies will survive, it remains to be seen.
Cyr thinks Bitcoin will hold the top spot for some time.
“In a year, I think we’re still going to see Bitcoin holding its position as the prime cryptocurrency … It will take a long time for the value of those other competitors to catch up.”
Bitcoin, lunched in 2009, was the first currency to use a decentralized payment system, meaning transactions happen directly from person-to-person instead of having a central bank monitor the currency.
Bitcoin has seen a significant increase in value this year. According to Canadian Bitcoin Index Charts, On July 1 of 2017, the value of one Bitcoin was around $3,300. At the time of writing this, the value of one Bitcoin was around $19,700.
Cyr said one of the significant issues with cryptocurrency is taxation, because of the inherent privacy of the transactions. He predicts governments around the world will be trying to regulate taxation in some form.
“Most countries have decided to tax it like a commodity with capital gains, but how do we know who’s making the transactions?” said Cyr.
He said instead, governments may attempt to regulate exchanges that deal in the trading of the Bitcoin or other forms of cryptocurrency.
Some have suggested Bitcoin is following the same road as the dot-com bubble of the late 1990s, and Cyr said there are certainly similarities.
“In finance, we recognize there have been speculative bubbles where markets seem to be overvalued and that there’s an overreaction in the market,” said Cyr.
“I think you can see some of that in terms of the growth of the initial cryptocurrency offerings where people are speculating on what could be the next Bitcoin.”
He said for that reason the future of cryptocurrencies individually is unpredictable, but the blockchain technology is here to stay as other Bitcoin-like systems rise and fall.
For all we know, the next big cryptocurrency could start in Niagara Falls — after all, Vegas is apparently a great place to spend Bitcoin. Why not Canadian Vegas too?