The term Cryptocurrency denotes a form of payment which can be used online against the goods and services. Nowadays, many companies have launched their own currencies, which are often called as tokens, and can be traded explicitly for the goods or services that the company offers.
Further, Cryptocurrencies operates using a technology known as blockchain. Blockchain refers to a decentralized technology that spread across many computers to manage and record transactions. Furthermore, the appealing part of this technology is its security.
Therefore, a cryptocurrency refers to a virtual or digital currency that is intended to work as a medium of exchange. The said concept is quite similar to the real world currency, except the fact that it does not have any corporal embodiment, and it uses cryptography to operates.
In this blog, we will discuss some concepts relating to and benefits of Cryptocurrency.
Concept of Cryptography
Cryptography denotes a method of using the process of encryption and decryption to protect and secure communication in the incidence of third parties with ill intent, i.e., against third parties who desire to steal the data or spy on your conversation.
Further, the computational algorithms, such as SHA-256 are used by cryptography, in which the hashing algorithm that a Bitcoin uses are as follows:
- A public key, which is like a digital or virtual identity of the user shared with everyone;
- A private key, which is like a digital signature of the respective user that is kept hidden.
Different Types of Prevalent Cryptocurrencies
It shall be noted that based on the data released by the CoinMarketCap.com, a market research portal, nowadays, there are more than 10000 different cryptocurrencies, which are traded publicly.
Also, cryptocurrencies continue to flourish by raising money through initial coin offerings (ICOs).
The total worth of all cryptocurrencies as on 23.07.2021, was more than $ 1.3 trillion, which is a bit down from April high of $ 2.2 trillion.
Further, the total value of all the prevailing bitcoins, which is the most popular digital or virtual currency, was nailed at about $ 608.6 billion, which is again down from April high of $ 1.2 trillion.
Cryptocurrencies based on Market Capitalisation
The top 10 trading cryptocurrencies based on their market capitalization as listed by CoinMarketCap, a cryptocurrency data & analytics provider are as follows:
|Bitcoin||$ 608.6 billion|
|Ethereum||$ 240.4 billion|
|Tether||$ 61.8 billion|
|Binance Coin||$ 48.6 billion|
|Cardano||$ 37.6 billion|
|XRP||$ 27.4 billion|
|USD Coin||$ 26.9 billion|
|Dogecoin||$ 24.9 billion|
|Polkadot||$ 12.5 billion|
|Binance USD||$ 11.5 billion|
Benefits of Cryptocurrency
The key benefits of Cryptocurrency are as follows:
- Cryptocurrency experiences significant volatility because of huge amounts of short-term speculative interest;
- Cryptocurrency market is typically available to trade 24*7 days a week, as there is no centralized governance of the said market;
- Cryptocurrency dealings take place directly among individuals;
- Due to liquidity factor, cryptocurrency can easily convert into cash that, too, without affecting the market price;
- Cryptocurrency has the ability to both long and short;
- Cryptocurrency provides leveraged exposure;
Future of Cryptocurrency
For the concept of cryptocurrency, the world is clearly divided based on different opinions. On one side there are supporters, such as Bill Gates, Richard Branson, and Al Gore, who states that cryptocurrencies are far better and convenient than regular currencies.
Similarly, on the other hand, peoples such as Paul Krugman, Warren Buffet, and Robert Shiller, are totally against it. Shiller and Krugman, who are Nobel Prize winners in the domain of economics, name it as a Ponzi scheme and a channel for criminal activities.
Therefore, in the future, there is going to be a major conflict between regulations and anonymity. As several cryptocurrencies have been associated with terrorist attacks, so governments would want to regulate and manage how cryptocurrencies work. Conversely, the main emphasis of cryptocurrencies is to safeguard that user remain anonymous.
Also, it shall be noted that Futurists trust that by the end of the year 2030, cryptocurrencies will easily occupy 25 percent of total national currencies, which denotes a significant chunk of the world will start believing in the fact that cryptocurrency can operate a mode of transaction.
Moreover, it is going to be progressively acknowledged by merchants and customers, and will remain to have a volatile nature, which means that prices will continue to fluctuate and vary, as they have been doing for the last few years.
In a nutshell, cryptocurrency is a digital or virtual currency that can be utilised to buy goods and services. Further, it uses an online ledger that has a strong cryptography to secure and protect online transactions. The benefits it provides are only possible due to the strength of the technology that reinforces it because it works.