A cryptocurrency is a form of digital currency that is decentralized and isn’t controlled by any form of government. The idea of cryptocurrency originated with the possibility of money being owned by no one.
Bitcoin was one of the first cryptocurrencies to be released to the public via an anonymous creator named Satoshi Nakamoto, the idea of breaking free from a single monetary power that was in control of your money and wasn’t printable. Cryptocurrency runs on various codes that are powered by numerous citizens of the internet. While the idea was popularized in 1989, the technology was still in its baby stages, with new and popular forms of inventions occurring all over the globe. In 2009 Bitcoin was released by Nakamoto and was launched as open-source software.
Today cryptocurrency has leapt bounds. It has exceeded the expectations of various investors, but it still has its downfalls, like in 2017 when Bitcoin prices fell about 65% from 6 January to 6 February. It enables people to send money from wherever, whenever and worldwide. It’s a massive shift from the earlier cashless banking called the credit cards that were famous before crypto. The reason why the market seemed down in 2020 was the cause of the crypto exchange FTX. Its bankruptcy, along with its reduced liquidity from the crypto market, triggered its downfall.
Companies that are in the main game for cryptocurrency right now
- Bitcoin: founded in January 2009 by an anonymous creator with the pen name Satoshi Nakamoto; today, its price in the market is ₹ 23,13,355 with its market cap ₹9T and uses code BTC, XBT and is currently the world’s largest digital asset with a total cap of 21 million
- Ethereum: founded by Vitalik Buterin on 30 July 2015; today, its market price is ₹ 1,49,872 with its market value ₹6B and code x86-64, ARM architecture family and is in second place with bitcoin in the lead and has over 8,000 nodes
- Litecoin: Inspired by Bitcoin, it was started in October 2011 by Litecoin Core Development Team and uses code github.com/litecoin-project/litecoin and has a market price of ₹ 7,609.8 and a market cap of ₹6B
- Ripple: released in 2012 by ripple labs. Its repository is github.com/ripple/rippled, and current market price is ₹ 40.79, and market cap is ₹ 2.1T
(The numbers are not constant and change with the market trends)
A blockchain is a software that enables individuals to connect various networks of computers to connect to each other without any middleman. It decentralizes the network through which values can be sent instantly and securely without making the cost higher than it is. Blockchain and cryptocurrency were created to enable a decentralized system, and blockchain technology was developed to support cryptocurrency. While there is no server or data where you can access the data, there is a distributed ledger where no one can own them. While blockchain is widespread, there is no guarantee that blockchain will always be cryptos base as IOTA is one such non-blockchain-based cryptocurrency. It is based on a mathematical concept known as “Tangle”, and the claims are it will be more efficient than Bitcoin.
Covid-19 bought a disastrous effect on cryptocurrencies by destabilizing the efficiency of cryptos, making them more volatile, which would only further decline with global health on the line. Cryptocurrency will always remain more irregular than the international equity market, which would decrease the demand for cryptocurrency in today’s market.
For 2023 the future of cryptocurrency is still uncertain while its scope of growth is not. The range of crypto is not limited to only this, as predictions are that it might be a boon.
Faults/ risks in crypto
- Criminals and cyber crimes: if there is growth in technology, there will always be an increase in the number of crimes associated with the same. While security is growing and trying to get them to be more concrete, their features are still insufficient to withstand cybercrimes. There have been more than 500 cybercrimes, and cryptocurrency has lost over 9 billion in estimation.
- Personal error: If the key is lost, forgotten or unkept and the password is the same, there is no chance of retrieving the currency. There is an absolute zero per cent chance of getting the money back.
- Market value: the market is not stable, and understanding its behaviour would take years, and it changes with the times. And with the market fluctuating, the prices of cryptocurrency also change accordingly.
- Illegal trading platforms: fraudulent acts can also take place via cryptocurrency, and there is no guarantee that behind the veils of crypto, there is a safe space as activities such as drug dealing and so much more can take place and already have taken place like the case of One-coin
While cryptocurrency is a minefield and a difficult task to unravel with enough support from the government and measures created to create more transparency, it can build trust and carve out reasons why exchanges may be required to provide information to their users. The Union Budget that is to be sought out would reflect the regulatory approach that would favour India and can be taken as a part of the G-20 deliberations that would take into consideration the customers.
HE neither endorses any investment instruments mentioned in the content whatsoever nor encourages the readers to make any investment decisions based on the information provided herewith.
