Are cryptocurrencies going to be the next global currencies of the world?
Sterling or US dollars? For us, it has always been one of those European or American currencies that have been considered the most powerful or global currencies over time. However, no national currency could ever be labelled as a “global currency” because of the fact that all national bills are only valid within their own borders. But as much as it sounds surreal, it is also true that global currencies actually exist. These currencies are beyond the reach of any central authority. In fact, these currencies are beyond everyone’s reach. It is intangible. We call these currencies “cryptocurrency”.
Well, A cryptocurrency, often known as a crypto, is a digital currency fabricated to function as a means of exchange through a computer network that is not maintained and regulated by any central authority, such as a government or bank.
While all these things being called digital might make it sound like something which is very new to us, strangely, the first cryptocurrency was minted back in 1983 by an American cryptographer, David Chaum. He called that “ecash”. In 1995, he implemented his e-cash through “Digicash”.
Currently, Bitcoin is the most popular cryptocurrency, founded by Sathosi Nakmoto in 2008. In the year 2009, Bitcoin was made available to the public. Once, which had a price that couldn’t even buy a pencil, is now priced at 37,211.80 USD. There were 18,925,137 bitcoins existing as of January 10, 2022. This means that roughly 19 million Bitcoins have already been mined. That means there are approximately 2 million more Bitcoins to be mined, as only 21 million Bitcoins will ever exist. The current total market value of a cryptocurrency's circulating supply is 705,169,923,739 USD.
Similarly, there are many other cryptocurrencies like Ethereum, Dogecoin, Litecoin, Ripple, etc. which coexist alongside Bitcoins in the market.
Now that we know what cryptocurrency is, what is it? What was its history? And, what are the current trending cryptos? Let’s get deeper into it.
We all know that cryptocurrencies exist in the market. But where did they come from? How are these intangible currencies minted? I know you all are having the same question as I do.
Crypto mining. This is how it is done! Crypto mining is the reason for more currencies to regulate in the market. So, what is it? Certainly nothing related to mining earth or something.
Mining is the process through which networks of specialised computers create and distribute new Bitcoin (and other cryptocurrencies) as well as validate new transactions.
Mining involves a huge, spread-out network of computers all over the world that verify and secure blockchains, also known as the virtual ledger that notes down all the crypto transactions all over the world. As a reward for this task, miners are provided with new coins on their computer network. This process is called a cycle: miners maintain and secure the blockchain, and in return they get coins for the blockchain. This is the only reason this network is so safe and secure. It is because there are so many miners and mining farms all around the world that it becomes close to impossible to manipulate data in the network, if not impossible.
For basic knowledge, remember that the GPU is the main computer component that helps in mining.
Till now, everything sounded great, right? It's interesting, safe, and the new, spread-out paradigm of money. Everyone should use it, you know? Well, let’s not forget that a coin has two faces. Everything has its own pros and cons, and we must acknowledge the risks and disadvantages involved in cryptocurrencies.
While we are talking about its advantages, being decentralized We also need to understand that the market is highly volatile. As much as we are gaining every day, that can also be lost within a minute. A crypto crash can have an adverse effect on the market. Remembering the 2018 crypto crash, which collapsed 80% from its peak in January 2018, that was even worse than 1998’s dot.com bubble's 78% collapse.
Again, in January 2022, the value of several major cryptocurrencies, including Bitcoin and Ethereum, fell precipitously. By January 21, the fall had wiped more than $1 trillion USD in market value, which was more than the 1929 Wall Street Crash. The crash occurred as a result of a Russian prohibition on cryptocurrency mining. This is the extent to which it has a negative impact on the market when it crashes.
Also, talking about its safety. Surely, blockchain is the safest. But cryptos have other repositories like wallets and exchanges can still be hacked.
Furthermore, because cryptocurrencies are beyond the control of any central government, they have become a favourite tool for criminals. The instance of Dread Pirate Roberts, who maintained a drug trade on the dark web, is widely known. Cryptocurrencies have also become popular among hackers, who use them to carry out ransomware attacks.
This is not a game for children. Stepping into the game necessitates a substantial amount of information and preparation. Comparing crypto markets to stock markets such as the NYSE, NASDAQ, or NSE is a bad notion. Without adequate understanding, anyone might fall into the traps that are distributed over the internet. An expert can only peer through the cracks in the walls. You should not be afraid to try new things because you are not an expert. Even if you lack knowledge, good counsel is still available. A good consultant can point you in the proper direction.
Risks will always exist in the market, but that is why we are here.
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