Are cryptocurrencies ready to go mainstream?

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

Coinbase, a platform used for buying and selling cryptocurrencies, became the first major cryptocurrency company to go public on the U.S. stock market last week. The listing marks a milestone for the cryptocurrency industry as it takes on an increasingly significant role in the mainstream economy.

Cryptocurrencies are, in the simplest terms, digital money. They can be used to buy things online in the same way a credit card might be used. But cryptocurrencies differ from traditional payment methods in important ways. They aren’t issued by a government and are decentralized, meaning data is shared across thousands of computers worldwide rather than a single network like a credit card database. The most enthusiastic cryptocurrency advocates believe the technology will eventually replace traditional currencies like the U.S. dollar and become the dominant way people around the world pay for goods and services.

At the moment, opportunities to use cryptocurrencies to buy things in the real world, though growing, are still very limited. Most of the activity around cryptocurrencies has involved people investing in the currencies themselves, like a stock or a commodity. These types of investments have created enormous returns for early investors. Bitcoin, the most popular and well-known cryptocurrency, has skyrocketed in value over the past few years. Once valued at a fraction of a cent, the price of a single Bitcoin eclipsed $60,000 earlier this month. The total value of all cryptocurrencies is estimated to be more than $2 trillion.

Why there’s debate

The question of whether cryptocurrencies are becoming mainstream depends on how you define “mainstream.”

One area of debate among economists and investors is over how significant a force the cryptocurrency market will be in the broader investment landscape. Optimists say there’s little reason to believe the cryptocurrency boom will slow and could even accelerate as the public becomes more aware. Pessimists say the history of wild price fluctuations and uncertainty around practical applications will limit the number of investors who are willing to choose cryptocurrencies over stocks and commodities.

There’s also disagreement over whether cryptocurrencies will even become a true alternative for traditional money that the average person can spend in everyday life. There have been some strides in this area. The electric car company Tesla recently announced that it will accept Bitcoin as payment for its vehicles. Digital payment app PayPal has begun allowing users to make purchases with their crypto holdings. But skeptics say cryptocurrencies have a long way to go before they pose a threat to standard currencies. Others see practical limits on the horizon — like increased regulatory scrutiny and growing discontent over the industry’s environmental impact — that could sink cryptocurrencies’ future prospects.


Cryptocurrencies are gradually becoming more mainstream

“So even if you think bitcoin, cryptocurrencies, and the blockchain are weird or confusing, you should expect to see them continue to creep into everyday life.” — Rebecca Heilweil, Vox

As an investment tool, cryptocurrencies are here to stay

“For the longest time, there were only a few investment choices for people who wanted to go above and beyond a 401(k) or a savings account. Those with extra income typically opted for stocks, bonds, annuities, and real estate. Today, many adults in the United States — especially millennials and Gen Zers — find those granddad options about as relevant as a phone book.” — Will Johnson, Boston Globe

It will be a long time before they become a mainstream payment option

“The industry’s biggest issue — fulfilling the promise that the technology is more than just a place to park money — could take another decade to play out.” — Erin Griffith, New York Times

Bitcoin will never be more than an investment tool

“Bitcoin … has no intrinsic value; it never did and never will. It is a purely speculative asset — a private fiat currency — whose value is whatever the markets say it is.” — Willem H. Buiter, Marketwatch

In specific instances cryptocurrencies can be better than cash

“As far as digital dollars go, it’s probably most useful to banks and businesses that send large amounts of money all over the place. But I think it could also make it easier to do that in your own life — whether it’s paying rent or sending money to relatives overseas.” — Jen Wieczner, New York

The crypto market is destined to crash

“The little guys are aiming to breach the ‘club’ not by managing other people’s money but by ginning up their own currency — and setting the value for it. For a while, it seems, they could get very, very rich. The rigged game will seem as though it’s finally licked. The crypto market will go up and up and up. ... And then … it will come crashing down. Or so the history of the market tells us.” — Virginia Heffernan, Los Angeles Times

Cryptocurrency has advantages over traditional money

“If you were to design the financial system today from scratch, you would design a decentralized system, a system by which any person can exchange value with any other person without an intermediary. In a nutshell, that’s what crypto is. And therefore, it is likely that we migrate to a world where transactions are done without intermediaries because it’s more efficient, because it costs less, because it’s faster.” — Gil Luria, director of research at D.A. Davidson, to Marketplace

There’s little evidence cryptocurrency can expand beyond its current user base

“Thing is, I’m still struggling to figure out what bitcoin is good for. Bitcoin has been around for more than a decade, yet it remains an inconvenient way to pay for things, inferior to dollars or credit cards in almost every way. Most merchants don’t take it, so in the United States it’s mostly used by devoted hobbyists.” — Megan McArdle, Washington Post

Environmental concerns will limit cryptocurrency unless they’re resolved

“Many of the complaints about Bitcoin over the years have been overhyped. But the cryptocurrency’s increasing use of real physical resources — energy and computer chips — can no longer be ignored. If Bitcoin wants to avoid government crackdowns, it needs to shift to technologies that don’t require constant massive resource consumption just to maintain the currency’s price.” — Noah Smith, Bloomberg

Even if cryptocurrency were broadly accepted, it doesn’t make sense to spend it

“I don’t think people are looking at it from a spending perspective. People are looking at it as an investment still. Why would you want to spend an appreciating asset on a depreciating product? It just makes no sense.” — Cryptocurrency broker Eleesa Dadiani to CNN

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Photo illustration: Yahoo News; photos: Getty Images