Cryptocurrency has taken public imagination by storm the past two years as its exchange rates with fiat currencies have fluctuated immensely, increased mechanisms for its purchase and usage have been adopted, and governments have taken increasing interest in its activity and potential regulation.

While far from its late-2017/early-2018 highs, Bitcoin retains a total market capitalization for its circulating supply of about $170.1 billion. However it remains only part of the larger crypto-space, as the total cryptocurrency market capitalization is about $264 billion – far from its high of over $795 billion around the turn of the year in January 2018.

While popular and professional conceptions of cryptocurrency fluctuate just as wildly as its price, the fact that cryptocurrency is still around in force and developing rapidly in its technological, financial/economic, and regulatory frameworks shows it will be here to stay. With megalithic companies such as Facebook engaging in cryptocurrency as well with it is worth understanding how the technology may affect economic – and daily – life for people.

At its core cryptocurrency and its associated blockchain technology is a computer program designed and released with a large variety of hard rules that keep the currency within certain bounds. While many cryptocurrencies have associated functions as well, such as the ability to build programs off of its blockchain or an additional function for the crypto as units in a business, game, or other function, that is the heart of what makes a crypto distinct.

In many ways cryptocurrencies are like the private currencies” that have been around for centuries if not millennia or even like a mix of gift cards/store credit and electronic payment services such as PayPal. However the major difference is that cryptocurrencies operate under sets of rules that vary in strictness and definitiveness, reducing the ability usually of any set of players from affecting the currency’s validity or usage.

Unlike an electronic payment transmission service there is no approval for transactions. There is no bank, unless one adds a cryptocurrency intermediary, saying whether a deposit may be pending or blocked. Unlike a private currency issuer they cannot invalidate their currency, set limits and expirations, or play other legal games with terms and conditions. Unlike the private currencies of old, cryptocurrencies utilize both the Internet for speed and usability while also being based off blockchain to prevent counterfeiting and ensure authenticity.

All of these factors mean that undoubtedly governments see cryptocurrency as a threat to monetary policy mechanisms, as governments are unable to easily reach in and move mechanism such as interest rates, currency in circulation, or other keystones of modern economic regulation. It even affects fiscal policy, as it becomes difficult to track and tax transactions that are exchanged along the blockchain rather than through the current array of financial services that all face strict and controlled reporting and monitoring requirements.

We saw this firsthand when in 2018, as cryptocurrency transactions exploded, we saw complex problems arise with taxes and accounting for cryptocurrencies in terms of captain gains, income taxes, sales tax, and other government revenue-raising operations that suddenly faced unique reporting challenges – sometimes with nefarious criminal use.

It is easy to imagine a future in which cryptocurrencies flourish as a means to allow citizens and businesses to transact with one another using monetary mechanisms free from manipulation and control, almost as a private citizens economic tech-utopia. On the other hand it is also easy to imagine a future in which cryptos run wild, robbing consumers of both their fiat and blockchain funds and lead to fiscal, monetary, and economic chaos.

However in fact neither future seems likely as governments see the threat cryptocurrency poses to governance in both futures. As cryptocurrencies in all their financial mechanisms – whether exchanges, the programs themselves, purchase and usage, storage, and securitization – face greater government controls they see reduced potential but also less uncertainty.

The likely result will be a world in which a variety of cryptocurrencies operate as an alternative to fiat currencies for those who wish to participate in a slightly freer monetary mechanism. Cryptocurrencies may see less price volatility, although recent price movements have shown big shifts may not be completely gone for good. The larger cryptocurrencies likely will retain significant inertia, both in usage and price levels, as smaller cryptocurrencies carve out their own niches for particular industries and uses.

Cryptocurrency, even at its now well-developed stage and far past its public debut, still has exciting advancements to be made. It is truly a modern concoction, bringing together the latest advances in financial services, Internet services, software, and more. Its risks are likely to continue to decline as governments lay down a fundamental framework for the institution and large private players continue to dig out ways to stabilize the product without it losing its unique appeal and distinctiveness.

Cryptocurrency is here to stay. The only question remains how fast will its pace of development, integration, and adoption be, as well as how people choose to use this new technology and asset.

— Erich Reimer is a Captain in the United States Army. He previously served as a government affairs lawyer and media commentator. Views expressed are his own and not those of the Department of Defense.