There is a sudden craziness and demand behind cryptocurrencies all over the year since the past few years. Its ease of transaction, transparency, frequent price fluctuations, unregulated nature, the impossibility of double-spend and many more factors have contributed to the popularity of cryptocurrencies over the past few years.
A cryptocurrency is electronic cash or digital currency that exist as an algorithmically encrypted file on different computers over a wide network. Since the network of these computers is not centralized (or decentralized), it cannot be controlled by a central authority unlike legal tenders of countries across the world. This technology of decentralized computer-nodes that stores ledgers of transactions are known as a blockchain. These currencies can be exchanged from user to user with the help of online wallets (like Coinbase) or hardware wallets (like Ledger Nano).
Blockchain Technology is a list of records called blocks which are encrypted using algorithmic cryptography to maintain security. This was born out of Satoshi’s concept of a peer-to-peer electronic cash system. Blockchains can be defined in short as a foolproof public ledger that records transactions.
A record-keeping service is done using computer processing power. Miners keep the blockchain consistent, complete and vulnerable by repeatedly grouping newly broadcast transaction into a block.
Bitcoin is the first cryptocurrency that was proposed by an anonymous person known under the pseudonym “Satoshi Nakamoto”. During late 2007, the world started facing a global financial crisis. By mid-2008, it was at its peak and the “Satoshi” proposed an alternative cash system through a white-paper on 31st of October. The proposed network came into existence and the Bitcoin was live by 3rd January of 2019.
The intention of Satoshi Nakamoto while inventing bitcoins was to enable quick and cheap online payments other than traditional banking channels. It gained popularity when its price rose from around 572 USD (Aug 2016) to 4764 USD (Aug 2017). Since there is no central bank control, its easily transferable but dangerously vulnerable. Threats of being used for the purchase of drugs, weapons and cater to terrorism is high.
Crypto has emerged as a popular investment option having 2.9-5.8 million users worldwide during 2017. In 2014, bitcoin prices started at $770 and rose to $13,412.44 in 2018. An all-time high of prices, $19783.06 were touched on 17 Dec 2017. The prices started going down since China imposed a ban and touched $6914 in Feb 2018. The prices further got affected due to several hacks and thefts from cryptocurrency agencies. About $761 million bitcoins were reported to be stolen from exchanges.
Legality across the world
Some countries have altogether prohibited them while some others have imposed regulatory oversights and indirectly nodded yes to crypto. Nevertheless, no part of the world accepts it as a country’s legal tender.
Countries to say “Yes”
- United States of America
- European Union
Countries to say “No”
Some nations as listed below find the volatility and decentralized nature of crypto a threat to the country’s monetary system and safety.
The future of cryptocurrency
Some economists foresee a big change in crypto as institutional money enters the market. Moreover, they see a possibility to get bitcoins floated on Nasdaq (the second-largest stock exchange across the globe), which will add on to the credibility of cryptocurrencies across the world. If things go as per their predictions, a time shall come when crypto will be used as alternatives to conventional currencies.