Cryptocurrency, the 21st-century unicorn, or should we say the money of the future?
Cryptocurrency has recently gained a lot of popularity among the people of the world and has taken the financial sector by storm. Today, it will be hard to find a bank or a financial organization that has not done any research or posted a thesis on cryptocurrencies and blockchain technology. It has turned into a phenomenon that has changed the way of payment and has colored the evolving canvas of the digital world in its own colors.
For those who are still having a hard time understanding the concepts and the basic meaning of Cryptocurrency – it is a medium of exchange, created and stored electronically in the blockchain, using encryption techniques to control the creation of monetary units and to verify the transfer of funds. In simple words, it can be defined as limited entries in a database that no one can change without fulfilling some specific conditions. Bitcoins, Litecoins, Ethereum (ETH), ZCash and Ripple are some of the types of cryptocurrencies that are currently being used in the market. Bitcoin, however, is the most popular form of Cryptocurrency.
Bitcoin is the first decentralized form of currency and was developed in the year 2009. Unlike its name, Bitcoin is not a coin, but a code or a virtual token that can be freely transferred from one person to another through a secured network.
Cryptocurrencies are consistently touching new marks and recently moved past $11,000 in terms of cost per unit. In Indian rupee, the amount turns up to around 8.6 lakh rupees per unit. However, a Bitcoin can be purchased in parts as well for as low as Rs. 1000. One will be shocked to know that in India alone, an approximate of Rs. 250 crore trades are done in cryptocurrencies (Bitcoin) per month.
The legality of cryptocurrencies still varies from country to country and keeps changing as we move across the globe. While some countries allow and promote the usage of cryptocurrencies, others like Indonesia and China have strictly banned the trade of cryptocurrencies.
There are some hitches in using the blockchain technology and cryptocurrencies. For example, the technology used in the entire process is very complex and is not easy to understand in the firsthand experience. Moreover, blockchain and Cryptocurrency are still not legalized and centralized in many countries. Hence, one might feel prone to frauds while dealing with such transactions. The technology also has many fundamental issues in the setup and faces many challenges in proper implementation.
At the same time, Cryptocurrencies like Bitcoins and Litecoins have various potential applications in today’s market. Furthermore, the increased usage of cryptocurrencies helps in increasing transparency and precise tracking of the transactions whilst marking positions in the permanent ledger. Using blockchain technology and cryptocurrencies through it also has a significant impact on the cost and are considered as a cheaper medium of transactions.
The power and effectiveness of using cryptocurrencies can be understood by the fact that a man in the USA bought a Tesla Model S in the year 2013 by paying only 92 bitcoins while the actual cost of the car was over $100,000. There are many such incidents that indicate the growing use of cryptocurrencies in the modern world. The number of cryptocurrencies enthusiasts is increasing exponentially with time insinuating towards making cryptocurrencies the currency of future.
Written & Compiled by Faber Kishlay Krishna & Faber Mayuri Pandya