Future of Cryptocurrency
What is cryptocurrency?
Cryptocurrency is a digital currency that is developed and managed using advanced encryption techniques known as cryptography. Cryptocurrency has made it less of an academic concept to be realistic (visible) with the development of Bitcoin in 2009. While Bitcoin drew a following in recent years, it grabbed the attention of investors and the media in April 2013 when it reached a record $ 266 per bitcoin after a 10-month high two months ago. Bitcoin has played a market value of more than $ 2 billion above it, but a 50% drop soon after that sparked a heated debate over the future of cryptocurrencies in general and especially Bitcoin. So, will these different currencies eventually replace traditional currencies and suddenly become available in dollars and euros one day? Or are cryptocurrencies a passing fashion that will soon burn? The answer lies in Bitcoin.
The future of Cryptocurrency
Some economists predict that there will be a major shift in crypto as the institutional currency enters the market. In addition, there is a possibility that crypto will float on the Nasdaq, which could continue to add credibility to the blockchain and its use as another common currency. Some predict that all that crypto needs is a guaranteed exchange (ETF) fund. The ETF will definitely make it easier for people to invest in Bitcoin, but there is still a need to invest in crypto, which can be automated with the wallet.
Understanding Bitcoin
Bitcoin is a separate currency that uses peer-to-peer technology, which performs all the functions like withdrawing money, processing transactions, and ensuring that it is done collaboratively by the network. flipside that there is no central authority to ensure that things go smoothly or to recover the value of Bitcoin. Bitcoins are digitally created through a “mining” process that requires powerful computers to solve complex techniques and crunch numbers. They are currently generated at an average of 25 Bitcoins every 10 minutes and will be held at 21 million, a level expected to be reached by 2140.
These features make Bitcoin completely different from fiat currencies, backed by full trust and high payouts by its government. The issuance of Fiat money is a very moderate activity overseen by the nation’s largest bank. While the bank controls the amount of money disbursed in accordance with its monetary policy objectives, in excess there is no maximum limit on the number of such disbursements. In addition, local funds are insured for bank failure by the state body. Bitcoin, on the other hand, does not have such support mechanisms. The value of Bitcoin depends entirely on what investors are willing to pay for it over time. Also, if Bitcoin exchanges threaten, clients with Bitcoin ratings have no way of returning them.
Bitcoin future Outlook
The vision for the future of bitcoin is the subject of much debate. While financial media outlets are heavily expanded by so-called crypto-evangelists, Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggests that the "big feeling" among crypto supporters is that the total "market value of cryptocurrencies could explode in the next five years. $ 5-10 million. ”
The tense history of the property sector "is not a cause for alarm," he said. However, he downplayed his optimism and the "crypto evangelist" view of Bitcoin as digital gold, calling it "nutty," meaning that its long-term value "could be $ 100 instead of $ 100,000."
Rogoff says that unlike visible gold, the use of Bitcoin is limited to transactions, which makes it more vulnerable to a bubble-like collapse. In addition, the cryptocurrency power verification process "works much better" than programs that rely on "a trustworthy central authority such as a central bank."
Increasing Testing
Bitcoin's main advantages of segmentation and anonymous transactions have also made it a popular currency for a number of illegal activities involving money laundering, drug trafficking, smuggling, and arms sales. This has attracted the attention of powerful regulatory agencies and other government agencies such as the Financial Crimes Enforcement Network (FinCEN), the SEC, and even the FBI and the Department of Homeland Security (DHS). In March 2013, FinCEN issued rules that defined exchanges of tangible funds and executives as financial services businesses, bringing them under government policy. In May of that year, DHS suspended the Mt. Gox - the largest Bitcoin exchange - held in Wells Fargo, which is suspected of violating anti-money laundering laws. Also in August, New York's Treasury Department issued subpoenas to 22 emerging payment companies, many of which owned Bitcoin, to inquire about their actions. to prevent money laundering and to ensure consumer protection.
Other Bitcoin alternatives
Aside from its recent problems, the success of Bitcoin and its growing visibility since its launch have led many companies to come up with alternative payment methods, such as:
Litecoin - Litecoin is considered Bitcoin's leading competitor right now, and is designed to process small transactions quickly. It was launched in October 2011 as "Bitcoin's silver gold coin," according to founder Charles Lee. Unlike the great computer power required in Bitcoin mining, Litecoins can be extracted with a standard desktop computer. Litecoin's maximum limit is 84 million - four times the Bitcoin limit of 21 million - and has a processing time of about 2.5 minutes, about one-fourth of Bitcoin.
Ripple - Ripple was founded by OpenCoin, a company founded by technology entrepreneur Chris Larsen in 2012. Like Bitcoin, Ripple is a money and payment system. Part of the money is XRP, which has a mathematical base like Bitcoin. The payment method enables the transfer of funds by any currency to another user on the Ripple network in seconds, unlike Bitcoin transactions, which can take up to 10 minutes to verify.
MintChip - Unlike many cryptocurrencies, MintChip is actually creating a government institution, especially the Royal Canadian Mint. MintChip is a smartcard that holds an electronic value and can transfer it securely from one chip to another. Like Bitcoin, MintChip does not require personal identification; unlike Bitcoin, it is backed by a virtual currency, the Canadian dollar.
The future
Some of the limitations currently facing cryptocurrencies - such as the fact that a person's digital assets can be erased by a computer crash, or that a virtual vault may be attacked by a criminal - can be overcome in time by technological advances. What will be difficult to overcome is the basic paradox that bedevils cryptocurrencies - if they are popular, follow the law and government tests that they may be attracted to, which undermines the very foundation of their existence.
While the number of traders accepting cryptocurrencies has grown steadily, they are still very small. For cryptocurrencies to be widely used, they must first gain widespread acceptance among consumers. However, their relative difficulties compared to conventional finances can deter many people, other than those who are technically competent.
A cryptocurrency that wishes to be part of a standard financial system may need to meet very different conditions. It will need to be complex math (to avoid fraud and hacking attacks) but easy for consumers to understand; distribute to communities but with adequate consumer protection and protection; and maintain user anonymity without having to resort to tax evasion, money laundering, or other malicious activities. Since these are awesome ways to satisfy, is it possible that the most popular currencies over the next few years could have signs that interfere with fiat currencies and today’s currencies? While that may seem far-fetched, there is no doubt that with the current cryptocurrency, the success of Bitcoin (or its lack of it) in tackling the challenges it faces could determine the fortunes of other cryptocurrencies in the years to come.
Should You Invest in Cryptocurrencies?
If you are considering investing in cryptocurrencies, it would be good to manage your “investment” in the same way you would manage any other guesswork. In other words, know that you risk losing most of your investment, if not all. As mentioned earlier, cryptocurrency has no internal value other than what the consumer is willing to pay for it at some point. This makes them more susceptible to high price fluctuations, which in turn increases the risk of losing an investor. For example, Bitcoin dropped from $ 260 to about $ 130 within six hours on April 11, 2013.
If you are not able to get rid of that type of abortion, look elsewhere for the best deals. While the view continues to be deeply divided on the legitimacy of Bitcoin as an investment - supporters point to its limited supply and growing use as price drivers, while opponents see it as just another bubble - this is one argument that a savings investor would do well to avoid.
The conclusion
The emergence of Bitcoin has sparked controversy over its future with other cryptocurrencies. Despite the recent problems with Bitcoin, its success since its launch in 2009 has encouraged the development of other cryptocurrencies such as Etherium, Litecoin, and Ripple. A cryptocurrency that wishes to be part of a standard financial system will have to meet very different conditions. While that may seem far-fetched, there is no doubt that the success or failure of Bitcoin in tackling the challenges it faces could determine the fortunes of other cryptocurrencies in the years to come.