Cryptocurrencies and Blockchain - Where Are We? was the topic of an AmCham Indonesia Young Professionals Committee virtual discussion on May 27.
Committee Chair Calvin Ray, of CastleAsia, moderated. He began by looking at Bitcoin, the world's first cryptocurrency, speaking about its history and the rise of cryptocurrencies as a digital asset. Bitcoin was created to work as a medium of exchange using cryptography rather than relying on central authorities.
Cryptography is a method of protecting information and communications through the use of codes, using an algorithm and key for cryptocurrencies so only those for whom the information is intended can read and process it.
Blockchain is a system of recording information in a way that makes it difficult to change, hack or cheat the system and is used for the trading of cryptocurrencies, among other things. It acts as a digital ledger of transactions distributed across the whole network of computer systems on the blockchain
Guest speaker Edward Ricardson, CTO and Lead Developer at SWIRF Labs, an IT and cybersecurity company, said the value of Bitcoin first peaked at $20,000 in early 2018, before crashing later in the year. The price has soared 700 percent since March 2020, when the stock market crashed due to the COVID-19 pandemic, and cryptocurrencies were seen as a more lucrative alternative, reaching an all-time high in April 2021 of $64,000. As an investor in Bitcoin, Edward said he never expected the value to go so high.
As of today, there are over 10,000 cryptocurrencies and over 380 exchanges. Bitcoin remains the dominant market player with over 40 percent of the total market cap, followed by Ethereum at 19 percent. Daily trading volume hovers around $200 billion. This has inspired the creation of various other cryptocurrencies with different functionalities.
Can Bitcoin and the other cryptocurrencies maintain their meteoric rises? Calvin and Edward said they don't know for certain. They feel prices rose too quickly, fueled by the euphoria of new and inexperienced investors looking to make easy money, quickly. Crypto "whales" now have the power to manipulate the market by selling off large amounts for massive profit, and the recent bull run was aided by the massive investment by huge corporations.
But after every bull-run, prices fall tend to fall, before recovering to hit all-time highs. These huge fluctuations, with the pursuit of short-term gain rather than long-term investment and benefits, make cryptocurrencies both potentially lucrative and unstable. Making the market very difficult to read long term.
There will undoubtedly be more record highs, but will they outweigh the lows? That is the burning question.