Virtual cryptocurrency, Bitcoin, Ethereum and its growth using blockchain explained along with its creation and present value.
What we define as currency, varies widely from people to people, culture to culture. But most certainly, it is a form of tangible asset or a material to carry out transactions. Since its introduction in economic systems in ancient Mesopotamia, currency has evolved from crops to the most versatile version till date, cryptocurrency. As technology accommodates itself into our lives day by day, it was only a matter of time that currency itself got digitalized. Yes, we have witnessed the rise of internet and mobile banking over the past decade, but cryptocurrency has slowly established itself as more of an asset, that as a means of transaction.
Bitcoin, the first word that pops in our minds when we come across the word cryptocurrency. Though it is fundamentally the most valued form of cryptocurrency at the moment-soaring at over USD $36,000, many others do exist. These include Ethereum, Litecoin, Zcash, Steller Lumens etc. Though currently one of the hottest topics on the internet, many are unaware of what Bitcoins truly stand for. Is it a digital currency? Is it acquirable? Is it worth investing in when there are other tangible forms such as gold and diamond? Let us have a look.
Taking the World by Storm, Ascending Higher than any Other Conventional Currency or Asset Ever Did through Rigid Policies.
The coding and the technicality that goes into building any particular cryptocurrency is complex. But from a perceivable standpoint, most of the cryptocurrencies are a mere variation of Bitcoin, the first recorded cryptocurrency. But what’s causing the price of Bitcoins to fluctuate? More appropriately, grow at an exponential rate? To apprehend this trend, we must familiarize ourselves with blockchain. What we define as a cryptocurrency’s blockchain is a master ledger; a growing list of records that is continuously updating itself as more and more bitcoins (or a chunk of a single bitcoin) are traded over the online marketplace. A timestamp, transaction data and blocks containing a cryptographic hash from the previous block is what essentially creates ‘blocks’ and separates them. Traders enjoy the impenetrable security of the asset along with zero influence from the regional geography and politics. This makes the asset virtually independent; unlike currencies such as US Dollars, British Pounds, BD Taka etc which can be and are affected by inflation or other such catastrophes. The finite supply of any particular cryptocurrency also allows it to be as precious as metals such as gold and silver, which create value from their limited availability. In 2009, Satoshi Nakamoto, a pseudonymous person or group released Bitcoin to the public, which quickly gained acceptance. Eventually, in late 2012, WordPress became the first major merchant to accept payment through Bitcoins; since then, prices have only gone uphill. However, such pros can only be expected to lure in heavy drawbacks. Many countries view cryptocurrency as a potential threat due to its decentralized regulation, irreversible transaction procedures and most importantly its ability to facilitate black market transactions. For individual users, the high security can be attained through cloud storage, but lack of back-up data can prevent them from accessing their account in case of power-failure or any kind of disruption in the central servers.
Creating New Units in a Concentrated Market, Adding Value to Already the Most Appreciated Currency there Ever Was!
With the steady rise in Bitcoin’s value since its introduction in the last decade and the steep price over the last few months, cryptocurrency has proven itself as an asset worth acquiring. Miners, who are the record keepers that verify the security and accuracy of the currencies’ blockchains ensure the maintenance of the various security protocols that make the transactions safe and promise completeness. How does the mint generate new units you ask? Every new block that is created on the master ledger adds a new unit to the system, and every transaction accumulates an additional optional fee of typically less than 1% to the miner’s account-typically addressed as the ‘wallet’.
Whether one should invest in cryptocurrencies such as Bitcoin or Ethereum is solely their wish. But many speculate; including investment guru Warren Buffet, CEO of Berkshire Hathaway, that cryptocurrency is up for a decline in value soon, if not immediately. Moreover, to generate revenue worth retaining, investors might have to purchase multiple units which many find too big of a sum to invest. Nonetheless, expert speculation, adequate knowledge about the monetary reward systems and potential threats that might rise in the market may make an investment worthwhile, and convert the currency an indisputable asset of one’s portfolio.