Hello guys. I hope all of you are doing fine in this very difficult and helpless situation. In this blog, I am going to talk about cryptocurrency future. We will begin with the introduction of cryptocurrency, and then we will see how correct the statement is about cryptocurrency future.
WHAT IS CRYPTOCURRENCY?
A cryptocurrency is a form of payment that can exchange online for goods and services. Many companies have issued their currencies, called tokens, and these can traded specifically for the good or service that the company provides.
Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.
Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and record transactions. Part of the appeal of this technology is its security.
How many cryptocurrencies are there? What are they worth?
According to CoinMarketCap.com, a market research website more than 6,700 different cryptocurrencies is available for trade. And cryptocurrencies continue to increase, raising money through initial coin offerings or ICOs.
According to Coin Market Cap, the total value of all cryptocurrencies on April 13, 2021, was more than $2.2 trillion. The total value of all bitcoins, the most popular digital currency, was pegged at about $1.2 trillion.
Why are cryptocurrencies so popular?
- Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some of the most popular:
- Supporters see cryptocurrencies such as Bitcoin as the future currency and are racing to buy them now, presumably before becoming more valuable.
- Some supporters like the fact that cryptocurrency removes central banks from managing the money supply since, over time, these banks tend to reduce the value of money via inflation.
- Other supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems.
- Some speculators like cryptocurrency in future because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.
Are cryptocurrencies in future a good investment?
Cryptocurrencies may go up in value, but many investors see them as mere speculations, not real investments. The reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.
That’s what’s called “the greater fool” theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.
“For those who see cryptocurrencies such as bitcoin as the currency of the future, it should be noted that a currency needs stability.”
As Nerd Wallet writers have noted, cryptocurrencies such as Bitcoin may not be that safe. Some notable voices in the investment community have advised would-be investors to steer clear of them.
Is it effective?
Of particular note, legendary investor Warren Buffett compared bitcoin to paper checks: “It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?”
For those who see cryptocurrencies such as Bitcoin as the currency of the future, it should be noted that a currency needs stability so that merchants and consumers can determine what a fair price is for goods.
Bitcoin and other cryptocurrencies have been anything but stable through much of their history. For example, while Bitcoin traded at close to $20,000 in December 2017, its value dropped to as low as about $3,200 a year later. By December 2020, it was trading at record levels again.
This price volatility creates a problem. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend a bitcoin when it could be worth three times the value next year?
Are cryptocurrencies legal?
There’s no question that they’re legal in the United States, though China has essentially banned their use, and ultimately whether they’re legal depends on each country.
Also, be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to bulk investors. As always, buyer beware about cryptocurrency future.
Advantages of Cryptocurrency:
Protection from inflation –
Inflation has caused many currencies to get their value declined with time. Almost every cryptocurrency, at the time of its launch, is released with a fixed amount.
The source code specifies the amount of any coin; 21 million Bitcoins are release in the world. So, as the demand increases, its value will increase, which will keep up with the market and, in the long run, prevent inflation.
Self-governed and managed –
Governance and maintenance of any currency is a major factor for its development. Developer and miners store cryptocurrency transactions on their hardware. They get the transaction fee as a reward for doing so.
Since the miners are getting paid for it, they keep transaction records accurate and up-to-date, keeping the integrity of the cryptocurrency and the records decentralized.
Secure and private –
Privacy and security have always been major concerns for cryptocurrencies. The blockchain ledger is based on different mathematical puzzles, which are hard to decode.
This makes a cryptocurrency more secure than ordinary electronic transactions. Cryptocurrencies, for better security and privacy, use pseudonyms unconnected to any user, account, or stored data linked to a profile.
Currency can easily exchange –
Cryptocurrency can bought using many currencies like the US dollar, European euro, British pound, Indian rupee, or Japanese yen. With the help of different cryptocurrency wallets and exchanges, one currency can be converted into the other by trading in cryptocurrency across different wallets and minimal transaction fees.
A major pro of cryptocurrency is that they are mainly decentralized. Many cryptocurrencies are controlled by the developers using it and the people who have a significant amount of the coin or by an organization to develop it before it is released into the market.
The decentralization helps keep the currency monopoly free and in check so that no one organization can determine the flow and the value of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which the government controls.
Cost-effective mode of transaction –
One of the primary uses of cryptocurrencies is to send money across borders. With the help of cryptocurrency, the transaction fees paid by a user are reduce to a negligible or zero amount.
It does so by eliminating the need for third parties, like VISA or PayPal, to verify a transaction. This removes the need to pay any extra transaction fees.
A fast way to transfer funds –
Cryptocurrencies have always kept themselves as an optimal solution for transactions. Transactions, whether international or domestic in cryptocurrencies, are lightning-fast. This is because the verification requires very little time to process as there are very few barriers to cross.
Disadvantages of Cryptocurrency :
Used for illegal transactions –
Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to track down any user by their wallet address or keep tabs on their data.
.Bitcoin used in many illegal deals such as buying drugs on the dark web as a mode of exchanging money. Some also use cryptocurrencies to convert their illicitly obtained money through a clean intermediary to hide its source.
Data losses can cause financial losses –
The developers wanted to create virtually untraceable source code, strong hacking defenses, and impenetrable authentication protocols.
This would make it safer to put money in cryptocurrencies than physical cash or bank vaults. But if any user loses the private key to their wallet, there’s no getting it back. The wallet will remain locked away, along with the number of coins inside it. This will result in the financial loss of the user.
Decentralized but still operated by some organization –
Cryptocurrencies are famous for their feature of decentralized. But, the flow and amount of some currencies in the market are still in control by their creators and some organizations.
These holders can manipulate the coin for large swings in its price. Even hugely traded coins are susceptible to these manipulations like Bitcoin, whose value doubled several times in 2017.
Some coins are not available in other fiat currencies –
Some cryptocurrencies can only be traded in one or a few fiat currencies. This forces the user to convert these currencies into one of the major currencies, like Bitcoin or Ethereum, and then through other exchanges to their desired currency.
This applies to only a few cryptocurrencies. By doing this, the extra transaction fees are added to the process, costing unnecessary money.
Adverse Effects of mining on the environment –
Mining cryptocurrencies require a lot of computational power and electricity input, making it highly energy-intensive. The biggest culprit in this is Bitcoin. Mining Bitcoin requires advanced computers and a lot of energy. Ordinary computers can not do that. Major Bitcoin miners are in countries like China that use coal to produce electricity. This has increased China’s carbon footprint tremendously.
Susceptible to hacks –
Although cryptocurrencies are very secure, exchanges are not that secure. Most exchanges store the wallet data of users to operate their user ID properly. Hackers can stole this data, giving them access to a lot of accounts.
After getting access, these hackers can easily transfer funds from those accounts. Like Bitfinex or Mt Gox, some exchanges have been hacked in the past years. Bitcoin has stolen in thousands and millions of US dollars. Most exchanges are highly secure nowadays, but there is always a potential for another hack.
No refund or cancellation policy –
If there is a dispute between concerning parties or mistakenly sending funds to a wrong wallet address, the coin cannot be retrieved by the sender. Many people can use this to cheat others out of their money.
Since there are no refunds, one can easily be create for a transaction whose product or services they never received.
The Future of Cryptocurrency
Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, the possibility that cryptocurrency future will be floated on the Nasdaq would further add credibility to blockchain and its uses as an alternative to conventional currencies.
Some predict that all those crypto needs are verified exchange-traded funds (ETF). An ETF would make it easier for people to invest in Bitcoin, but they still need to demand to want to invest in crypto, which might not automatically be generated with a fund.
Hope you all like it about cryptocurrency future. If you want to ask any queries or suggestion related to above content. Feel free to contact us, join us on instagram https://www.instagram.com/anything_at_one/
you can check our more blog CLICK HERE