George Bragues, a cryptocurrency expert and program head of business at the University of Guelph-Humber, said he isn’t too worried about the crypto market despite a recent drop in its value.
“I think historically, what we’ve seen in the price of crypto has been a lot of volatility,” Bragues said. “So I don’t think that the recent price declines herald anything about the long-term viability of cryptocurrency because we’ve seen this show before of run ups followed by steep declines.”
The cryptocurrency market has plummeted as of late, with some of the biggest names on the market seeing significant losses.
Bitcoin has particularly seen its hardships seeing a just under 30 per cent, or $20,000, drop in the coin in the last six months.
A cryptocurrency is a digital or virtual currency that is secured by cryptography, the science of protecting information by transforming it into a secure format with encryption.
It isn’t issued by the government or banks like regular money, but it is instead issued by a decentralized system to record transactions and issue new units of cryptocurrency.
For a long period of time, the cryptocurrency space was looked at as a quick way to make a buck. Crypto was viewed as a form of investment that quickly made people millionaires.
Jacob Lieberman, a crypto investor who works at a Toronto logistics company, realized that fast earnings wasn’t a reality but did provide a decent way to make a passive income.
“For me, it was definitely the curiosity of making quick money,” Lieberman said. “I think that is where the lure is, but after you get past that, you do make some money, but certainly nothing life-changing.”
There are hundreds of different kinds of crypto currencies now and it can be hard to tell the difference between them. The currencies are a function of the technology and the purpose behind them, according to crypto investor and University of McMaster commerce student Kevin Lee.
“The way you can look at it is different cryptocurrencies being different projects,” Lee said. He said each crypto currency uses different programming, coding and purpose.
An example is the difference between Bitcoin and Ethereum. Bitcoins are used for monetary transactions while Ethereum is based upon smart contracts and embedding contracts within blockchain.
What people may not realize is how similar the growth and decline of a stock is versus a cryptocurrency. Lee explains it is very similar as both can be affected in the same way.
“When you look at risky assets in general, whenever there is uncertainty, for example, the beginning of this year with the inflation issues, new government policies and now the war with Ukraine and Russia are all factors,” Lee said.
Read more about the war in the Ukraine
“Riskier stocks and assets will be more volatile because people will be willing to pull their money out as soon as they can when they hear something bad happening,” he said.