Why has cryptocurrency become popular?

An introduction to cryptocurrency

A cryptocurrency is a virtual currency that is almost impossible to forge or double-spend owing to the fact that it is secured by cryptography. The advantage of using this method of transaction is that no third party, such as a credit card company or bank is involved while transferring funds between two parties. The public and private key along with various incentive systems such as “proof of stake” or “proof of work” help secure these transfers. Furthermore, such transfers involve bare minimum processing fees in comparison to wire transfers and financial institutions. Although, the semi-anonymous aspect of cryptocurrency makes it highly suitable for illegal activities such as tax evasion and money laundering.

Today, there are innumerable cryptocurrencies in the market. The three primary types are Bitcoin, Altcoins, and tokens/dApps. This technological revolution took place with the revelation of the idea of Bitcoins in 2008. Some of the top cryptocurrencies are Bitcoin, Ethereum, Ripple, and Litecoin.

The game changers: Bitcoin

The first blockchain-based cryptocurrency in the world is Bitcoin and it is considered to be the most popular and widespread. It was released as open-source software in 2009 and its price remained a few dollars in the initial years. The highest bitcoin value has been recorded to be at $20,000 per bitcoin in late 2017 and has undergone fluctuations quite a bit ever since. In April 2020, the value averaged at $7,000. The very first real-world transaction was between a bitcoin miner and Papa John’s in Florida where the former bought two pizzas for 10,000 bitcoins.

The basis of the bitcoin currency is a blockchain containing a public ledger of all deals in the bitcoin network. Participants can mine for bitcoins employing computer power. 

With time, Bitcoin gained both negative and positive exposure. It was during 2012 and 2013 that more and more retailers were opening up to the idea of using bitcoins. That being said, it was also in 2013 that the Silk Road website was shut down by federal authorities for engaging in black market transactions using bitcoins.

As of today, bitcoin is traded on quite a number of non-centralised independent exchanges like Coinbase. Different exchanges may have different prices thus leading to arbitrage opportunities across the various exchanges. Hence, it is challenging to ensure a uniform price.

The most popular crypto markets

Investition

For those looking to be an investor in cryptocurrencies, it’s necessary to treat it equivalent to any other highly provisional venture, knowing that it comes with the risk of losing a majority of the investment if not all of it. Please note that cryptocurrencies do not have any inherent value attached to it other than what a buyer is willing to pay for it. This makes it very prone to price swings and hence loses. Someone who is not familiar and comfortable with such volatility should stay away from this sort of investment.

Online gaming

In the past decade, the online gaming industry has undergone some incredible transformations, one of them being the introduction of cryptocurrencies as one of the methods of transactions. Quite a number of popular and reliable websites  – including online casinos not registered with Gamstop – accept Bitcoins and the likes. The introduction of bitcoins has relieved the headache of payment as gamblers are not presented with a quicker, securer and faster mode. Moreover, anonymity is guaranteed. Cryptos have also aided online gambling sites to cut down their operational costs considerably.

What the future holds for cryptocurrencies

The future of cryptocurrency is an issue of debate. It has undoubtedly become a global phenomenon but there is still a lot to be learned and unfolded about this growing technology. There are still a lot of parameters and concerns to be taken into consideration before it can be banned or put to use to the fullest. Supporters of Bitcoins and other cryptos claim these are far more superior to traditional physical currencies since they are not tied down to any government, any nation-state or body. Regardless of what critics or proponents say, no prediction can be guaranteed since it’s still an evolving technology.

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