Blockchains, sidechains, mining – terminology in the secret world of cryptocurrency accumulates in minutes. While it sounds unwise to impose new financial conditions in the already complex world of finance, cryptocurrencies offer a much-needed solution to one of the biggest troubles in today’s money market – transaction security in the digital world. Cryptocurrency is a defining and destructive innovation in the rapidly evolving world of financial technology, a responsive response to the need for a secure medium of exchange in the days of virtual transactions. At a time when transactions consist only of numbers and figures, cryptocurrency offers to do just that!
In its most basic form, the term cryptocurrency is evidence of the concept of an alternative virtual currency that promises secure anonymous transactions through peer-to-peer online networks. Wrong name is property rather than actual currency. Unlike everyday money, cryptocurrency models operate without a central authority as a decentralized digital mechanism. In the mechanism of distributed cryptocurrency, money is issued, managed and approved by a collective network of community peers – the continuous activity of which is known as extraction by peer car. Successful miners also receive coins in gratitude for the time and resources used. Once used, transaction information is broadcast to the public key network blockchain, not allowing each coin to be spent twice by the same user. Blockchain can be seen as a cash register. The coins are password protected with a digital wallet that represents the user.
The supply of coins in the world of digital currency is determined in advance, without manipulation, by anyone, organizations, government agencies and financial institutions. The cryptocurrency system is known for its speed, as a transaction with digital wallets can materialize funds in minutes, compared to a traditional banking system. It is also largely irreversible in its intent, further reinforcing the idea of anonymity and eliminating any further chances of tracking money back to their original owner. Unfortunately, the distinctive features – speed, security and anonymity – have also made cryptocurrencies a way of transactions for many illegal transactions.
Like the real world money market, exchange rates fluctuate in the digital coin ecosystem. Due to the limited number of coins, when the demand for currency grows, the value of coins increases. Bitcoin is the largest and most successful cryptocurrency to date, with a market capitalization of $ 15.3 billion, occupying 37.6% of the market and currently priced at $ 8,997.31. Bitcoin entered the foreign exchange market in December 2017, trading at $ 19,783.21 per coin before facing a sudden drop in 2018. The decline is partly due to the rise of alternative digital coins such as Ethereum, NPCcoin, Ripple, EOS, Litecoin and MintChip.
Due to tightly programmed restrictions on their supply, cryptocurrencies are considered to adhere to the same principles of economics as gold – the price is determined by limited supply and fluctuations in demand. With constant exchange rate fluctuations, their stability will still need to be reviewed. Thus, investing in virtual currencies at the moment is more speculation than the usual money market.
In the wake of the industrial revolution, this digital currency is an indispensable part of the technological breakdown. From the point of view of a casual observer, this rise can look exciting, threatening and mysterious at the same time. While some economists remain skeptical, others see it as a lightning revolution in the monetary industry. Conservatively, digital coins are going to displace about a quarter of national currencies in developed countries by 2030. This has already created a new asset class along with the traditional global economy, and a new set of investment funds will emerge from cryptocurrency in the coming years. Recently, bitcoin may have gone down to focus on other cryptocurrencies. But this does not indicate the collapse of the cryptocurrency itself. While some financial advisers emphasize the role of governments in fighting the secret world to regulate the central governance mechanism, others insist on maintaining the current free flow. The more popular cryptocurrencies, the more attention and regulation they attract – a common paradox that disrupts the digital bill and undermines the main purpose of its existence. In any case, the lack of intermediaries and supervision makes it extremely attractive to investors and causes a drastic change in daily trading. Even the International Monetary Fund (IMF) fears that cryptocurrencies will displace central banks and the international bank soon. After 2030, conventional commerce will be dominated by a crypto supply chain that will offer less friction and more economic value between technology-savvy buyers and sellers.
If a cryptocurrency seeks to become an essential part of an existing financial system, it must meet very different financial, regulatory and social criteria. It must be protected from hackers, user-friendly and heavily protected to offer its fundamental benefits to the core monetary system. It should maintain the anonymity of users without being a channel for money laundering, tax evasion and internet fraud. Since this is a must for the digital system, it will take a few more years to understand whether cryptocurrency will be able to compete in full swing with the real world currency. While this is likely to happen, the success of cryptocurrency (or lack thereof) in solving problems will determine the fate of the monetary system in the coming days.