Cryptocurrency

 “Bitcoin is going to change the world from a money transactional standpoint not just for Africa but for everywhere”  Akon. Cryptocurrencies are disrupting the traditional notion of currency. Cryptocurrency is a virtual currency. It is a medium of exchange which is made safe by the use of cryptography, which makes it nearly impossible to double spend. It is based on blockchain technology and mostly use decentralised control. Blockchain is a type of digital ledger in which the information is stored in the blocks which are linked or connected together by cryptographic hash. Each block contains cryptographic hash of previous block. There are various cryptocurrencies available which are Bitcoin, Polygon, Ethereum, Polkadot, Dogecoin, etc. Cryptocurrencies can be purchased through crypto exchanges.

The first decentralised cryptocurrency was released in 2009, as an open source software which is known as Bitcoin. It is considered as a revolution which has the power to change the world. Rick Falkvinge said “Bitcoin will do to bank what email did to postal industry”. Bitcoin constitute of more than 60% share in cryptocurrencies. Over 18.6 million Bitcoin are in circulation as on March,2021 with a total market cap of around $927 Billion. The legal aspect of cryptocurrencies differ from country to country.

Cryptocurrencies are becoming popular as people see it as currency of future and they want to buy it before it gets more valuable. Some people are interested in buying them as it removes the central bank from managing money supply. Nassim Talib the creator of Black Swan theory said “Bitcoin is the beginning of something great: a currency without the government something necessary”. Some people are interested in short term gains and are least interested in long term acceptance of cryptocurrencies, hence they are reluctant to have them. A lot of people like the technology behind them i.e., blockchain, according to them it is more secure than traditional banking. People also invest in them to preserve value against inflation.

Cryptocurrencies make transaction easier, faster and cheaper. The transaction takes place without the third party like banks or financial institutions. The processing fees is also minimal as compared to banks or financial institutions. Bill Gates said “Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency… for large transaction currency can get pretty inconvenient”. They are based on the principle of demand and supply. This makes them highly volatile. The value can change drastically over a span of weeks or even days. They have experienced rapid surges and collapses. Although they are very secure but the wallets and exchanges are highly prone to theft and hacking. They are very speculative, they are considered more speculative than stock trading of companies.

Everything has pros and cons but what matters at the end is how you consider it. There are a large number of people who made money or saved money through cryptocurrencies. On the other hand there are people who lost money due to hacking of wallets or giving the money in the hands of wrong broker in hope of getting cryptocurrency in their wallet.