What is the current state of cryptocurrency?

The current state of cryptocurrency is that it has received growing interest from investors over the past few years, has climbed in aggregate value (although most digital coins remain volatile in their day-to-day fluctuations and are more investment vehicles than actual payment mechanisms), and continues to see the introduction of new digital coins. Cryptocurrency is also likely to received intensified scrutiny from regulators, as there are tax implications around cryptocurrency and potential impacts to government monetary authorities.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

Cryptocurrency is garnering increased interest from investors, as the aggregate value of the many different cryptocurrencies available has climbed dramatically over the past five years, although it remains volatile. While most digital currencies remain more of an investment vehicle than an actual payment mechanism, new digital coins continue to be introduced, and crypto is also likely to receive intensified scrutiny from regulators.

In terms of growing interest from investors, over the past few years, the value of Bitcoin, one of the top five digital currencies, has climbed. Currently, one Bitcoin equals more than $48,000, according to coinmarketcap.com. By comparison, the US dollar price of one Bitcoin about five years ago was just under $427 for one Bitcoin. In the interim, the price of one Bitcoin has often been volatile, fluctuating greatly from week to week and even within one trading session.

At the same time, various entities continue to introduce new digital coins. According to most sources, there are more than 4,000 cryptocurrencies currently trading on various exchanges. Currently, the interest in cryptocurrency reflects investment interest and speculation more than it does actual need for crypto as a payment mechanism, although the use of crypto to pay for goods or services has increased over the years. In fact, there are Bitcoin and other crypto ATMs that people can use to access their currencies in order to use the digital coins to make purchases.

Given the growing interest in and value of crypto, regulators around the world are taking a closer look at the currencies.

Last Updated by eNotes Editorial on