The world of cryptocurrency has experienced an upsurge ever since March 2020. So, what happened, and why is crypto news everywhere? Is this the start of a new revolution? Have we found a money-spinner? Well, the questions are never-ending and so are the answers. So, let’s dive in and discover more about the crypto concepts, terms, and application process. We live in a fast-paced world, where wanting everything at our fingertips is the ultimate goal and every sector is leveraging the digital space for business growth. One of the ever-expanding industries FinTech has stepped into the virtual forefront changing the way money is transferred and available. The traditional banks are replaced by hi-tech payment applications, which make everything feasible, reliable, with other responses and services being prompt. Hence, digital currency is on the go, and crypto is spreading at the speed of light.
The Basics of Cryptocurrency
Let’s understand what cryptocurrency is? This concept is derived from two separate terms which are cryptography and currency. Cryptography involves the study of techniques for secure communication between sender and receiver and currency is simply cash. Hence, cryptocurrency is a form of digital cash. It is decentralized digital money that works using a technology called the blockchain. Let’s understand what a blockchain is, a block is a database that stores the information related to sender, receiver, and other important details of various transactions. When the data is unlimited and one block can’t fit all, there are many blocks and these are linked to each other via a chain. This technology is highly secured and immutable, hence prevents loss of data.
Trading or investing in cryptocurrency is secure as there is no third party included and only sender and receiver are included. So, now the question that pops in our head is what is the value of the cryptocurrency market? As of 2021, the cryptocurrency market is worth 1 trillion and there are more than 4,000 cryptocurrencies in existence.
What is Bitcoin?
Out of all the cryptocurrencies, Bitcoin has the largest market capitalization and occupies almost 65% of the total market capitalization of all the cryptocurrencies put together. It is a digital cryptocurrency, which was invented in January 2009 by Satoshi Nakamoto, whose existence is still debated today. Bitcoin uses peer-to-peer technology operating with no central bank or authority and has no physical presence. Everyone has transparent access to all Bitcoins as nobody owns or controls them and all the cryptocurrency balances are kept on a public ledger. Each bitcoin is simply a computer file and just the way we keep our cash and cards in a physical wallet, Bitcoins are also stored in a digital wallet. The wallet can be hardware-based or web-based and be stored on a smartphone or computer.
How can you own a Bitcoin?
First, let’s understand that individuals can own Bitcoins or parts of them. A bitcoin wallet stores an individual’s Bitcoins for future spending or trading, this digital wallet will be assigned by an app or service provider. It has an alpha-numeric string of random letters and numbers, which is like a “Bitcoin Address” or “Bank Account Number”. Furthermore, you can buy or sell Bitcoins on exchange platforms that require an individual’s personal information like photo id, license, and more to abide by security guidelines. One can also earn cryptocurrency through mining and bitcoin miners receive Bitcoin as a reward for processing verified transactions. The mining is performed using high computing processes on a powerful network.
Bitcoin: A Form of Payment
When you invest in Bitcoins, the next question arises, what to do with it, should we sell it or save it for further usage. As we all know that the growth of cryptocurrency has labeled itself as a future currency, so how can we use this digital money to leverage our purchases? Well, yes bitcoin can be accepted as a means of payment to buying products or services. The recent news has assured that in the upcoming times, cryptocurrency can be added as a secured payment option.
Bitcoin’s Current Value and Market
As of February 2021, the value of 1 Bitcoin is $47,000 approx. and this number keeps on fluctuating now and then. The crypto market is volatile, but Bitcoin has potential and as a digital currency it has marked its value in today’s time. It has been estimated that soon Bitcoin value could reach over $100,000 or more for one Bitcoin. These record-breaking digits are making it the topic of each day as this will transform the digital payment world.
Altcoins, Tokens, and More
Bitcoin is not just one in the market as Bitcoin hit a new high and gained popularity, it also initiated the invention of hundreds of other crypto coins known as altcoins. Now, there is also a term called ‘token’, so what does that mean and how is that different from a coin? Well, the point of difference between altcoins and tokens is their structure, while cryptocurrency operates independently and uses its separate blockchain; the tokens are built on top of another pre-existing blockchain.
As we know that there are other cryptocurrencies, let’s have a look at a few of them:
- Ethereum (ETH): Launched in 2015, this cryptocurrency works similarly to bitcoin and is the second-largest, most successful, and alternative to Bitcoin. It is currently valued at $1700$ approx.
- Ripple (XRP): Launched in 2012, this is a technology that acts both as a cryptocurrency and a digital payment network designed to work efficiently.
- Tether: Launched in 2014, this is the world’s most popular stablecoin, which is a type of cryptocurrency whose value is tied to a reserve asset.
Other currencies include Chainlink, Dogecoin, Cardano, Stellar, Litecoin, Polkadot, Bitcoin Cash, and more. All these cryptocurrencies have lower market value as compared to Bitcoin and Ethereum.
The Future of Cryptocurrency
According to some economic analysts, crypto will bring in a big change in the long years as a new form of money is entering the market. However, that alone doesn’t promise a bright future. Holistically, there are too many factors affecting such a fundamental digital currency, the on-going market trends, values, stocks, trade, and more are all vital parts of this bigger picture. Cryptocurrency has useful purposes but has wild speculations and the main challenge lies in the adoption of a new digital payment option becoming a part of the mainstream financial system. Moreover, few countries have to make it legal to invest and trade using cryptocurrency.
In this digital era, cryptocurrencies should be leveraged as they add significance, success, and empowers the various industries and companies using such an optimum technology. A tech-driven world enables more technology-savvy individuals to support a decision of using a different form of encrypted currencies indicating an advanced market dimension, which is safe, decentralized, and growing with leaps and bounds.