What is Cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.
Cryptocurrencies are systems that allows us for secure payments online which are denominated in terms of virtual “tokens”, which are represented by ledger entries internal to the system.
KEY PARTICULARS
- The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
- It is a form of digital asset based on a network that is distributed across a large number of computers which are also used in digital marketing.
- Cryptocurrencies face criticism for a number of reasons, including their use for illegal activities, exchange rate volatility, and vulnerabilities of the infrastructure underlying them. However, they also have been praised for their portability, divisibility, inflation resistance and transparency.
THE FUTURE
Cryptocurrency has become a global phenomenon in recent years, although much is still to be learned about this evolving technology. There are many concerns and worries revolving around the technology and its capacity to disrupt traditional financial systems. Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market.
Moreover, there is the possibility that cryptocurrancy will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified exchange traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which might not automatically be generated with a fund.
Over the years it has been observed that the cryptocurrencies have been highly volatile and component, especially the Bitcoin. This volatility mainly depends on the decisions taken by the United States’ financial regulators on the usage of Bitcoin. However, the future of Bitcoin can be summarized as follows –
- With its increasing popularity, Bitcoin users predict that by 2024, almost 94% of different types of Bitcoin will be released.
- A forecast by Jeremy Liew , Snapchat’s first investor, estimates Bitcoin to hit a staggering $500,000 by 2030.
- The popularity of this form of currency is expected to grow exponentially, as it is decentralized, safe, and anonymous.
Recently, the price of Bitcoin crossed the record high of $54,000. The historic feat was achieved after a leading electric carmaker announced that it bought $1.5 billion in Bitcoin and would accept the currency as the mode of payment. The steep rise in the value of the virtual currency has made it a hot topic among analysts and investors all over the world.
The meteoric increase in the value of Bitcoin has positioned cryptocurrencies at the forefront of investors’ attention. Bitcoin is currently the largest cryptocurrency, with a market capitalisation of $1trn. Although Bitcoin is the number one cryptocurrency, there are currently over 10,000-plus cryptocurrencies in use.
Several digital currencies have outperformed returns on Bitcoin. For example, Ethereum, the second-largest cryptocurrency with a market cap of more than $300bn, has increased by 750% since 2020, surpassing Bitcoin’s 600% gain.
SUMMARY
However, it is predicted that the profits once made by miners by creating new blocks will reduce to such an extent that it will be negligible. Cryptocurrency is only in its initial stages, so it is too soon to assume whether cryptocurrency will be the future of money or what will be the impact of Bitcoin in the coming years.
