Blockchains, side chains, mining – terminology in the world of secret cryptocurrencies is accumulating minute by minute. While it may seem unreasonable to impose new financial terms in an already complex financial world, cryptocurrencies offer one of the biggest concerns in today’s money market – a much-needed solution to operational security in the digital world. Cryptocurrency is a definite and disruptive innovation in the fast-moving world of fin-tech, a response to the need for a reliable means of exchange in the days of virtual transactions. At a time when deals are just numbers and figures, cryptocurrency offers to do it!
Cryptocurrency in its earliest form is a testament to an alternative virtual currency that promises secure, anonymous transactions through a peer-to-peer online network. The wrong name is more of a property than an actual currency. Unlike everyday money, cryptocurrency models operate as a centralized digital mechanism without a central authority. In a distributed cryptocurrency mechanism, money is given, managed and approved by a network of collective community peers – known as sustainable activities mining in a peer machine. Successful miners also earn money by valuing the time and resources they use. Once used, transaction data is transmitted to a blockchain on the network under a public key, preventing each coin from being spent twice by the same user. Blockchain can be considered as cash register. The coins are protected behind a digital wallet that is password protected by the user.
In the digital currency world, the supply of coins is pre-determined without manipulation by any person, organization, government agency or financial institution. The cryptocurrency system is known for its speed, as digital wallet transactions can earn money in minutes compared to a traditional banking system. It is also largely irreversible with its design, which further strengthens the idea of anonymity and eliminates the possibility of returning the money to the original owner. Unfortunately, the notable features – speed, security and anonymity – have made crypto coins a method of transaction for many illegal trades.
Like the money market in the real world, exchange rates fluctuate in the digital coin ecosystem. As the demand for currency increases due to finite coins, coins lose value. Bitcoin is the largest and most successful cryptocurrency to date; market capitalization is $ 15.3 billion, occupying 37.6% of the market and currently at $ 8,997.31. Bitcoin was bought at $ 19,783.21 per coin before facing a sharp decline in 2018, hitting the foreign exchange market in December 2017. The decline is partly due to the rise of alternative digital coins such as Ethereum, NPCcoin, Ripple, EOS, Litecoin and MintChip.
Due to strictly coded supply constraints, cryptocurrencies are thought to follow the same principles of the economy as gold – prices are determined by limited supply and demand fluctuations. With continued fluctuations in exchange rates, their sustainability will still be seen. As a result, virtual currency investments are more speculative than the daily money market.
After the Industrial Revolution, this digital currency was an indispensable part of the technological breakdown. From the point of view of a casual observer, this rise may at once seem alarming, dangerous, and mysterious. While some economists are skeptical, others see it as a lightning revolution in the money industry. Conservatively, digital coins will replace a quarter of national currencies in developed countries by 2030. This has created a new class of assets alongside the traditional global economy, and a new investment vehicle will emerge from cryptocurrency in the coming years. Recently, Bitcoin may have dipped a bit to focus on other cryptocurrencies. However, this does not mean that the cryptocurrency itself will not collapse. While some financial advisers emphasize the role of governments in overthrowing the underworld to regulate the central governing mechanism, others insist on continuing the existing free flow. The more popular cryptocurrencies are, the more research and regulation they involve – a common paradox that condemns the digital note and erodes the very purpose of its existence. In both cases, the lack of intermediaries and control makes it very attractive to investors and leads to a sharp change in daily trading. The International Monetary Fund (IMF) fears that such cryptocurrencies will displace central banks and international banking in the near future. After 2030, regular trading will be dominated by a crypto supply chain that will offer less friction and more economic value among technologically good buyers and sellers.
If cryptocurrency wants to be an important part of the existing financial system, it must meet very different financial, regulatory and social criteria. To provide the main benefits to the underlying money system, hackers must be sustainable, consumer-friendly, and strictly protected. It should protect the user’s anonymity without money laundering, tax evasion and internet fraud. Since these are an absolute necessity for the digital system, it will take a few more years to understand that cryptocurrency can compete with the real world currency. Most likely, the success (or failure) of cryptocurrency in overcoming difficulties will determine the fate of the monetary system in the coming days.