Bitcoin was back in the news over the summer as the world’s most infamous unregulated digital money, what analysts now refer to as a crypto-currency. We published an article briefly reviewing the mother of all crypto-currency earlier this year. But bitcoin is not alone in this brave new niche. These days cryptos are popping up faster than the colonial currencies issued by the original colonies in what would become the United States prior to the creation of the modern U.S. dollar. So many are in digital circulation that it’s hard to keep up, and more are coming every month.
Up until now, many have suffered in one way or another from being too much like bitcoin. Bitcoin became well-known in part because of its wild swings in value, swings that are irresistible to speculators willing to gamble on up or down moves. But the same volatility that attracts gamblers tends to scare off businesses and consumers who might otherwise use one of these new forms of money for routine day-to-day commerce.
The public introduction of a new crypto-currency is called an Initial Coin Offering, or ICO, and it works in some ways like the more familiar initial public offering of a new stock. I’ve been following the development and release of one such virtual currency that was recently made public and sounds like it could be more useful for ordinary consumers than some of its many competitors. Dive in to learn more about one ongoing ICO, and how some of those features might actually work in the real world.
Ideally, money needs to be stable in value and widely accepted. A ton of problems leading to all kinds of crises the world over have happened or been greatly exacerbated precisely because one form of money or another went haywire. Volatility is a big problem, whether you’re trying to run a business or manage a household budget. A unit of money that can double overnight or get cut in half in a week is so unstable that businesses and people will tend to shy away from it, just like consumers would try to avoid rapidly-inflating currencies seen in post-World War I Germany, or today’s Bolivar in Venezuela. The opposite phenomenon, deflation, may not be as common, but it comes with its own set of problems.
The new crypto-currency that was announced at Tech Crunch in September is called Sparkle Coin, with an ICO now open and running until Nov. 20, and it sounds like there’s a lot more to it than just the currency itself:
After the ICO, online shoppers can use their Sparkle Coins, as well as other cryptocurrencies, to purchase products directly from their favorite online stores — including Amazon, Walmart, Target, Toys R Us, Bed Bath & Beyond, Staples and more — via VCoinMall.com, a peer-to-peer e-tailer which connects customers with retailers and other e-tailers.
Sparkle Coins can be transacted on VCoin Exchange, a currency exchange that allows for trading with other cryptocurrencies and fiat currencies. VCoin Exchange also provides free payment gateway software in the form of easy to download plugins, allowing virtually any merchant to accept Sparkle Coin and other cryptocurrencies as payment.
Sparkle Coins are initially priced at five U.S. dollars per unit and use a similar block-chain technology developed for authenticating bitcoins. But unlike most other cryptos, they are directly backed by a fungible commodity (GIA certified diamonds), there is a vertical exchange designed to change them into more familiar kinds of money, and payment gateways have been set up connecting that exchange to some of the world’s largest online retailers. Interested readers can review the official website here, and/or check out the video below for a shorter, one-minute version.
Most crypto-currencies work like bitcoin in the sense that they can be mined and earned through routine CPU activity, bought and sold with varying degrees of difficulty, and authenticated through the block-chain method. This one sounds similar on all three scores. In fact, the process for buying and selling items on popular retail websites sounds like it has been greatly improved and streamlined, but how successful the new currency will be as a widely accepted method of payment by consumers and vendors the world over remains to be seen.
Will crypto-currencies ever become mainstream? Will one or a couple eventually emerge from the pack, while others go the way of the Confederate dollar? No one knows, including a whole host of people who claim otherwise. Money has always been a weird, abstract, and often frustrating phenomenon with a long and storied history chock full of lies, calamities, and flat-out wrong forecasts made with the utmost smug confidence. It rarely seems to bring out the best in us, and too often brings out the absolute worst. Maybe one day large-scale robot and A.I. autonomy will render money as a former, necessary evil that earlier generations had to endure—or so I’ve speculated, anyway. But for our modern world with its vast, growing load of humanity to develop as far as it has, much less survive and grow, there had to be a way to trade goods and services that didn’t involve swapping livestock, cartloads of grain, or giant stone heads. Money remains a necessity. But as our world keeps changing, faster and faster, the money we use will have to change along with it.
If the idea here is to create a new, more stable crypto-currency that can be saved up for a rainy day or used in garden-variety commerce, and avoid the big swings and drops that keep bitcoin and its equally volatile cohorts in the news, maybe this one, or another like it, will do the trick. In the event it’s just a sparkle in the pan, well, the number of ICOs are increasing rapidly and that trend looks like it will continue.
But while the idea of crypto-currencies is new, the dilemma facing potential investors hasn’t changed. Trying to guess which form of future “money” might one day dominate the market at this point in time is as risky as trying to figure out which of today’s infant tech start-ups might be the Intel or Google of tomorrow.