2018: The Year of the Cryptocurrency Craze

In 2018, a type of digital money called cryptocurrency is taking the tech world by storm. Bitcoin, the most famous cryptocurrency, has seen its price shoot up to record highs. Experts are now asking big questions about what these digital coins are really good for — and whether the excitement will last.

Every new technology goes through a phase where people try to use it for everything. Email, search engines, and social media all went through this stage. Now it is cryptocurrency's turn, and the buzz is louder than ever.

At the heart of cryptocurrency is something called a blockchain. A blockchain is a shared digital record protected by complex math, so no one can fake or copy it. Developers want to use blockchains for much more than money — things like tracking land ownership, delivering medicine, and even giving out school diplomas.

Some of these ideas are exciting and smart, while others are just silly. Do we really need a blockchain to run an online encyclopedia? In 2018, someone will probably try it anyway, fueled by investors eager to cash in on the Bitcoin boom.

One of the biggest trends is something called an Initial Coin Offering, or ICO. An ICO is when a company creates its own new cryptocurrency and sells it to raise money. ICOs have raised around four billion dollars, mostly in just the past year.

Many people still think of Bitcoin as digital cash — a simple way to buy things online. But experts say that idea no longer makes sense. Each Bitcoin transaction takes too long, uses a lot of energy, and carries many risks.

Another major problem is how people store their Bitcoin. Most people pay outside companies to hold their coins in digital wallets. But those wallet companies can be hacked, shut down, or forced by governments to share private user information.

All three challenges — what tokens really are, whether crypto can replace cash, and fixing technical bugs — come down to trust. Strangely, Bitcoin was invented by people who wanted a system where you would not need to trust anyone. But today, people are still making guesses based on faith about which coins will last and which companies are the most reliable.

The crypto boom has been powered by cheap money and lots of computer power. But those resources are starting to run low. Video game players have noticed that graphics cards now cost more, because Bitcoin miners have bought up most of the supply.

The real test for cryptocurrencies will be whether they can become more efficient over time. As history shows, every big technology boom eventually has to prove itself — or fade away. As one expert warned, even the greatest explosions of life on Earth eventually ended in mass extinction.