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In a decade, cryptocurrencies have gone from digital novelties to trillion-dollar technologies. Their popularity is driven by the promise of decentralized money that can be transferred quickly and securely, even across borders. It’s a revolution in money and finance that could eventually affect every household, with some countries already taking steps to capitalize on it.
Bitcoin, Ethereum, and dozens of other digital currencies are used for everything from buying coffee to settling debts. Their value varies widely, however, and their volatility makes them unsuitable for day-to-day transactions, particularly when the price swings are large.
Despite their volatility, some cryptocurrencies have managed to gain broad appeal. The remittance economy, for example, relies on crypto to streamline international money transfers, with bitcoin serving as an intermediary currency. This is a growing business for firms like Bitpay and TransferWise.
Cryptocurrency mining is also booming, as miners use advanced equipment to earn rewards that can be sold for cash. But the energy-intensive process has raised concerns about its impact on climate change. Some cryptocurrencies are trying to reduce their energy consumption by using renewable energy or switching to a proof of stake model that uses less energy. The growth of the sector has prompted some policymakers to start crafting rules for this emerging industry. Regulators in the United States, for example, have begun to regulate some cryptocurrencies and DeFi enterprises. But other governments are taking a hands-off approach.
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