Cryptocurrency is such a new technology that not much is known about it. In fact, most people who have some familiarity with it only have a rough understanding of bitcoin, which is just one form of cryptocurrency.
In the eyes of many, the technology still resides in the dark web — a currency that has no function other than to evade government enforcement and to transact illegal purchases of drugs, prostitutes, and guns. Nonetheless, the promise of cryptocurrency extends far beyond the internet underground.
What about the US dollar?
Presently, the US Dollar is backed by the abstract idea of “the full faith and credit of the United States.” Once, it was backed by gold. However, for a number of reasons, this system proved to be ill-equipped to support a more globalized economy. Therefore, the U.S. government pinned the value of the dollar based on the trust that people hold in the U.S. economy. This move away from the gold standard to a faith-based currency was seen as groundbreaking.
The effect of cryptocurrency
Cryptocurrency, if perfected, would not just be groundbreaking, but a paradigm shift on how we exchange value—and possibly the greatest shift since the invention of metal coins. It requires no government oversight, which essentially means that there is no governmental entity that will back up the value of the currency or support a holder’s right to gold or any other commodity.
What’s the value of cryptocurrency?
The purchasing power of a bitcoin, for example, is inextricably linked to how much value the “market” for bitcoins ascribes to it. That is, the market of bitcoins, comprised of willing buyers and willing sellers, sets the value of the bitcoin based on nothing more than how much the sellers want in bitcoins for a good or service, and how much buyers are willing to pay.
This is different than the traditional currency exchange markets, where for example, the value of the U.S. Dollar fluctuates with the underlying health of the U.S. economy, as well as in response to the decisions made by the Federal Reserve. The value of cryptocurrency though exists entirely in the aggregate of individual buyers and sellers.
Why the bitcoin market is strong
Bitcoin’s programming is fixed, so that only 21 million bitcoins can ever exist. These are not yet all in circulation, as they need to be “mined”—a concept too esoteric for this series. What this means though is that, because there is a cap on the number of bitcoins, they can be traded in fractionalized amounts. Moreover, there can be no inflation through a deliberate flooding of the market.
What does the future hold for cryptocurrency?
As cryptocurrencies advance in the marketplace, it is still difficult to see whether they will replace or compliment government-backed currencies, or if governments will begin to back their own forms of cryptocurrencies. However, what is not in doubt is that as with the advents of previous technologies, the exchange of value is moving more and more toward complete abstraction.In the next post, we will discuss the technology that is the cornerstone of all cryptocurrencies—the Blockchain—and how it is more likely the true revolution. You can find that post below:
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
