Cryptocurrencies (aka virtual currencies) are grabbing the headlines lately. If you have read anything on them besides the basics of what they are, you have probably heard about the stories surrounding the exorbitant returns investors have obtained from them. Stories like Erik Finman’s who, years ago, invested a $1,000 dollar gift from his grandmother for his 12th birthday, for instance. Back then, each bitcoin was trading at 12 dollars.

When Finman turned 15, he agreed with his parents that he would drop-out of high school and use his savings to begin a startup. If he was unable to become a millionaire by the age of 18, he would have to attend college. At that point, his $1,000 were worth over $100,000. It turns out Finman moved to Silicon Valley and ended up selling his startup for 300 bitcoins in 2015, which increased his savings all the way up to 403 bitcoins.

Ever since Finman bought those $1000 in bitcoin, the currency’s value has been following an upward trend –with several crashes along the way. However, that trend has become considerably more vertiginous this year giving his 403 bitcoins a value of 1.7 million dollars approximately – today, Bitcoin is trading at around $4,300.

Finman did it and is therefore not attending college.

But, why should you really care about cryptocurrencies?

The truth is that cryptocurrencies are a game-changer. They are nothing like we’ve seen before and seem to be the beginning of the end of currencies as we know them, a step closer to the future. Many futurists claim with great certainty that these cryptocurrencies (Bitcoin, Ethereum, Litecoin, etc.) will fully replace hard currencies. Nevertheless, given that the disadvantages that tarnish the positive aspects of cryptocurrencies are significant, it is unlikely the futurists’ forecasts on cryptocurrencies take place. So, cryptocurrencies will probably not represent the end of government-regulated currencies. But, they might be the beginning of something else.

Why? Well, first of all, Bitcoin, Ethereum, and the existent cryptocurrencies are not centralized. This means no central bank controls how much of them are in circulation. Cryptocurrencies are obtained through complex computer operations known as “mining”, which basically anyone with the appropriate skillset and equipment can execute. Of course, this does not mean it is an easy operation to perform. But the point is that cryptocurrencies are unregulated.

Moreover, decentralization entails exceedingly high levels of volatility for the cryptocurrencies. If cryptocurrencies were to be accepted as official currencies, their volatility could be devastating to the well-being of any economy. For instance, Bitcoin has gained over 100% in value in relation to last year. It also lost somewhere around 26,9% of its value on a regular trading day this year. Ethereum, on the other hand, had a flash crash that brought its value down from $319 to 10 cents.

Furthermore, transactions are still slow. A Bitcoin transaction might take anywhere between 10 minutes and 1 hour. This means that because of its lack of practicality, Cryptocurrencies would not be able to become an economy’s regular medium of exchange.

Also, transactions are anonymous –not exactly untraceable. This aspect might sound attractive to regular users for it offers privacy. However, this feature is used by criminals all over the globe to ensure their operations remain hidden. For instance, Silk Road, a darknet market, relied on bitcoins as the medium of exchange for contraband products, illegal drugs, and fake documents. Other darknet markets allowed for the purchase of stolen credit cards, fraud and hacking services using Bitcoin and other cryptocurrencies. Governments would certainly be reluctant to adopt any of the existent cryptocurrencies if they supposed further complications to the task of cracking down on criminals.

All in all, regular currencies as we know them will be around for a while longer, and cryptocurrencies still have a long way to go. However, the latter is here to stay. It is therefore likely that banks and regulations will follow their pace in years to come. As governments increase cryptocurrency regulations, banks will begin to offer a wider range of services involving cryptocurrencies and so, their demand will subsequently increase.

It will indeed be unlikely that cryptocurrencies as we know them replace hard currencies in the future. Perhaps, what we might see in a few decades is the emergence of government-regulated cryptocurrencies. These could very well be an alternative that preserves the governments' monetary independence and that at the same time aligns with the new tendencies surrounding currencies.

These changes will not be evident in the near future. But in the mean time, stay tuned for the cryptocurrency revolution has just begun!