What are Feathercoins?

Find out the problems with cryptocurrencies here.

Gold barsUnless you’ve been living under a rock, you’ve probably heard of Bitcoins. Bitcoins are the biggest of a new type of currency – cryptocurrency.

Cryptocurrencies are little pieces of electronic data that people exchange instead of money. Frankly, they’re the future of money as we know it.

If you think about it, currently your money isn’t real. Even if you take it out in paper and coins, it’s still just piece of paper and metal. The value we place on the currency is something we all agree on. I can take a piece of paper into a shop and walk out with goods because everyone has agreed that that is fair. After all, I work in an office and just get given the same pieces of paper.

Feathercoins, Bitcoins, Litecoins, etc. are just an extension of this. They’re pieces of unique data that everyone has started agreeing are worth something. They are important because we start to leave behind the idea of a centralised government controlling currency.

For example, at the moment, the government of any country can decide to print more money to pay their bills. Why does this affect you? Well, when they print more money, they’re decreasing the value of every other piece of money in circulation by a little bit. Essentially they’re taxing you in an invisible way.

Now, usually it’s not that big of a deal, but sometimes the government prints so much that your life savings become worthless. That’s something most people would agree is a big deal.

Here’s where cryptocurrencies step in. There isn’t anyone who can print more at the drop of a hat. It takes a lot of complicated mathematics to make more. So the process of making more takes time.

At the moment, the value of the currencies is varying wildly. That’s due to two reasons:

– More businesses are accepting Bitcoins and others for goods sold;

– People are trying to jump on the Bitcoin bandwagon.

The first reason means that some currencies will only increase in value. For instance, it’s unlikely that Bitcoins will stop increasing in value long term.

However, the second reason is why Bitcoins are jumping up and down so much at the moment. Everyone’s heard of Bob who made a million dollars on Bitcoins. Those people are then buying Bitcoins like they’re lottery tickets and selling them as soon as they dip a little.

There are also other dangers to cryptocurrencies. The coding involved can be cracked somehow in the future and someone can manufacture coins quickly. That would crash any cryptocurrency and make them worthless. With a centralised government, there are people working hard to stay ahead of the forgers. There isn’t anything like that with most cryptocurrencies.

That’s where Feathercoins come in. They’re adding a centralised system back into the coins. They’re implementing a checkpoint system which means that the likelihood of forgers and cheats goes down. It’s not eliminated, but it’s reduced.

What I personally see happening with cryptocurrencies is waves of popularity. Bitcoin are the first and most popular at the moment, but people will move to another and then another. The values will stop varying so dramatically, but they will still rise and fall.

Personally, I think the ideal thing to do is to hop on a currency when it’s in it’s infancy. The investment is very little, it’s just a matter of downloading a client, but the pay off can be immense.

Of course, early adoption has it’s risks. I wouldn’t put my life savings into any of them. But the payoffs are greater when you take more risk.

 

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  1. Pingback: The Problem with Cryptocurrencies | Simon Cantan

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