We all rely on the banking system to store our funds and make transactions with our friends and family. Financial institutions are responsible for regulating all of our transactions, verifying them, and ensuring the privacy of our details. A lot of transactions are taking place all over the world, every second. A lot of people count on the banking infrastructure all over the world. Financial institutions like banks, help people to transfer money to whoever they want, under the bank’s supervision. Bitcoin is such a cryptocurrency that has seen a rise of 400% in its value in a very short period of time. Let’s discuss this in detail.
What is Cryptocurrency?
Cryptocurrency is a technological revolution. It helps users to make secure transactions on the internet and keep their money safe in e-wallets. Cryptographic currencies are a method of storing and sending money to others over the internet. It is the most reliable method to send money over the internet, as of now.
Some of the trending cryptocurrencies:
- Bitcoin (BTC)
- Ethereum (ETH)
- Matic Network (MATIC)
- Pi (PI)
- Dogecoin (DOGE)
- Dent (DENT)
- Tron (TRX)
- Litecoin (LTC)
Why are Cryptocurrencies so secure?
Simple. Cryptocurrency is safe because it uses cryptographic hashing functions. The transactions use strong encryption and a decentralized structure. Banks have a centralized structure. They have a head that keeps a record of each and every transaction.
Cryptocurrency uses a decentralized structure (a network of mining computers in real-time) that keeps track of the transactions made. These currencies use blockchain technology.
Cryptocurrency uses Secure Hash Algorithm (or SHA). SHA is a hashing function. Hashing functions are able to authenticate any piece of information. This information could be a file, a message, or proof of ownership.
SHA-256 is a very strong hashing function. It was published by the US National Security Agency in 2002. New variations were made in the function. A decentralized network is used to verify the transactions, which is so strong that no fraud could be committed in a transaction.
The secure cryptocurrency works on a network of computers at different locations. These are known as mining computers. These mining computers work out the mathematical calculations, which authenticate and verify the transactions that are taking place.
The computing power is used to verify cryptocurrency transactions. In return, the miner gets rewarded in form of some amount of that currency. Other than mining, one can also buy cryptocurrencies in exchange of real money.
Proof of Concept
The very first cryptocurrency that hit the market is Bitcoin (BTC). The founder of Bitcoin is not identified yet. It’s believed that the founder goes by the alias of Satoshi Nakamoto.
Some believe that Satoshi Nakamoto is an abbreviation of Samsung, Toshiba, Nakamichi, and Motorola. All of these are tech giants and well known all over the world.
The founder, Satoshi Nakamoto, founded bitcoin, and a website where he published how bitcoin works. Bitcoin.org contains proof of work. Since the release, anyone is able to publish their own cryptocurrency and a lot of cryptocurrencies are being launched.
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The crypto market contains a lot of digital currencies, including Bitcoin, which is the most popular digital currency. Investment in cryptocurrency can result as a good investment, and it has worked for a lot of people. If we look at the market data of Bitcoin, it has recorded a whopping rise of 400% within six months.
The value of other currencies such as Dogecoin and Ethereum is also rising like anything. Virtual currencies are so volatile, as the market is live 24/7, and there is no one to regulate the market. Just like the stock exchange of a regulates the stock market, there’s no such institution that manages cryptocurrencies.
The values of bitcoin and other cryptocurrencies are fluctuating every day. It is the best mode of payment for anonymous peer-to-peer transactions. This technology is forged in such a way that the sender or receiver cannot be traced. This is the main reason because of which cryptocurrencies are used for illegal transactions taking place on the dark web.
Recent Trends in Cryptocurrency Market
Since the release of Bitcoin white papers, more than 4000 cryptocurrencies exist in the market (as on January 2021). Many people have either invested in cryptocurrencies or are mining them. Bitcoin is the most mined currency as of now. As a result of the introduction of mining technology, the prices of GPU (Graphics Processing Units) have increased, as GPUs are required to mine more bitcoins in the same amount of time.
Anyone can download a mining application and start mining and earning bitcoins, provided they have a powerful computing strength. The market is so volatile that no one can predict the future prices of these currencies.
Many renowned personalities believe that cryptocurrencies are a bad investment as no institution regulates these currencies. It’s true that these currencies are not regulated, but there are people who have earned in millions just by investing pennies in bitcoin, in 2009.
Bitcoin and other cryptocurrencies have gained a lot of traction in the market. People have developed mobile apps so anyone can invest in these currencies. There are websites that show you real-time prices of the currencies. Bitcoin mining is now a profession. People are working on developing solar panels to power their own mining machines.
Tesla, the electric car manufacturing giant, has bought $1.5 billion worth of bitcoins and plans to accept payments in bitcoins. Elon Musk has tweeted that bitcoin is the future of payment modes. He has posted positive tweets for the cryptocurrency Dogecoin, and it has resulted in a drastic rise in the currency’s value.
Tesla has started accepting payments in bitcoins. Bitcoins were prominent on dark web, but now it is coming up on the surface web (the portion of internet that normal public uses) as well.
It is predicted that bitcoins will be used more in the future, and the prices will rise as well. It is possible that online payment gateways will start accepting bitcoins too. More and more businesses can start accepting bitcoins in the near future. In addition, people can also start stocking bitcoins instead of holding black money in cash.
In conclusion, cryptocurrencies are the future of financial institutions. Although there is no proper structure, still cryptocurrencies are on a rise. If cryptocurrencies are not the future, then at least it’s going to lead to something else. Something that no one would’ve expected. It would be good if a country is able to regulate these currencies as it will eliminate banking fraud.