Praxis Coworking is changing the concept of entrepreneurship in more ways than one, from an intermingled office space to, now, their own cryptocurrency.
But with so much hype, confusion and, most of all, speculation surrounding the future of cryptocurrencies, why dive into this new venture?
Robbi Anthony, CEO of Praxis Coworking, an office for businesses, startups and nonprofits of all shapes and fields in Spokane’s Holley-Mason Building, said the financial risk was low for her company, while the opportunities were far-reaching.
But, it also could end up useless.
Anthony said she and her business partner threw in 30 minutes, $20 and a little ether to make SpoKoin happen.
“The financial risk is incredibly low. You really can’t lose your shirt with SpoKoin,” she said.
As of now, SpoKoin is only available to members of Praxis. She said the business partners engage a lot in trading, so she wanted to find a currency to use without requiring the exchange of hard cash.
“It adds an underlying asset,” she said. While it doesn’t hold a lot of value currently, it can help govern the interactions Praxis members have as a coworking space. Anthony said each member can buy up to 1,000 of the 10,000 SpoKoins currently minted.
“A token can help create a currency that has a common value, and the ledger keeps track of it. Trade between businesses is usually incredibly lopsided, but with SpoKoin we might be able to help balance out the transaction,” Anthony said in a news release announcing SpoKoin.
Anthony said there are companies around the world using blockchain technology to create their own cryptocurrencies.
“Some are very useful, and some are total scat,” she said. “I just want to see cryptocurrency have a day-to-day application. … But it’s not going to replace cash anytime soon.”
And that is where the struggle lies with cryptocurrencies.
Cryptocurrency is something that acts like a dollar but isn’t legally money, said David Bunting, a professor of economics and chair of the Economics Department at Eastern Washington University. Its value is in exchange, he said.
“Bitcoins have value only because people believe they have value,” Bunting said. “It could be anything. You could use a rock if they believe it and are willing to purchase it.
“The idea here is that people have these cryptocoins, and that they are going to increase in value.”
But the fundamental flaw, Bunting said, is cryptocoins continue to be made. It is the same thing that happened with beanie babies and baseball cards – popularity grew, prices went up and more were made, then prices, and in response the value, crashed.
“People have basements full of beanie babies now because the prices fell,” he said.
Just as quickly as the value can rise, it can fall at the slightest bit of panic, such as earlier this month when Bitcoin’s price fell from $20,000 to $9,520 per coin amid fears of major hacking attacks and possible legal action by the U.S. Securities and Exchange Commission against “potentially unlawful” trading platforms, according to Newsweek.
Then a couple of weeks ago, more fluctuation hit as Bitcoin’s market capitalization dropped from $168 billion to $139 billion in a week. For all other cryptocoins that meant a $93 billion drop in market caps.
It all depends “on when you get in and when you get out. … Everybody wants the upside and nobody wants the downside,” Bunting said.
The downsides also include security scares and a large market of use in nonrecorded transactions.
Bunting said since its development, one of the biggest uses of cryptocurrency is for nonrecorded transactions. “If you don’t want people tracking you, it is supposed to be an underground currency,” he said.
Google recently updated its policies, banning advertisements for cryptocurrencies or content related to trading advice and cryptocurrency wallets, and Twitter following suit this week, saying it will ban or restrict such advertisements in an attempt to crack down on fraud. Facebook also took a similar step earlier this year, banning ads from “financial products often associated with deceptive practices, including those involving cryptocurrencies …”
“Even I would probably not use it until I know we have some reason to believe it won’t fluctuate and some security concerns are eased,” Bunting said.
“I would suspect after a while the cryptocurrency might be kind of a hobby, but I don’t think it’ll be a major activity.
“The feds won’t allow it to exist, and you won’t be able to do anything with it when the value falls.”
Praxis’ Anthony said SpoKoin is an interesting asset to experiment with, but she realizes it could “end up being completely pointless.”
“It sounds really sexy right now … but it’s just really a sandbox,” she said.
The Associated Press contributed to this report.
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