History of Cryptocurrencies
From the era of barter economy, metal and coins to gold and silver, continuing to the modern monetary systems and checks, and ending with the latest developments in the global currency, such as the introduction of cryptocurrency like Bitcoin, have passed centuries. Each type of money plays a crucial role in transactional activities in some period of time. As human society and markets developed in particular, there was a need for more sophisticated instruments for the exchange of goods. In this regard, the introduction of cryptocurrency revolutionized the international payment system in a size that only a few years ago was unimaginable. The cryptocurrency is a digital or virtual currency that uses cryptography for security. Cryptocurrency is hard to forge because of this security feature. The determining characteristic of cryptocurrency, and probably the most attractive, is its organic nature as the fact that it is not issued by any central authority. Cryptocurrencies have their own advantages and disadvantages. The main benefits of using cryptocurrencies are that they transfer the funds more easily between two parties in the transaction. These transactions are facilitated through the use of public and private keys for security purposes. These fund transfers are carried out with minimal processing costs, allowing users to avoid the large fees for online transactions charged by most banks. (Vigna, Paul; Casey, Michael J. (2015).
The Age of Cryptocurrency: When the trading price of two cryptocurrencies, Bitcoin and Ethereum, rocketed to the stratosphere in 2017, the term cryptocurrency rose to global popularity. It soon became part of the world’s vocabulary when The Major risks for investing in cryptocurrencies that need to be considered in the medium and long term. Market Basics Cryptocurrencies It’s been called one of the “great technological breakthroughs since the Internet” (Reuter News, 2014). In its brief history, crypto has had a significant reach across the financial world.
This article briefly compares traditional currency and cryptocurrency and outlines the differences between these two mediums of exchange. Cryptocurrency is becoming better-known and more popular throughout the entire world. However, being relatively new, you may not be familiar with it or why it’s even a big deal. It’s time to learn how cryptocurrency will make the world a better place.
The development of CCs (and all digital financial assets) has been the subject of many reports in recent years. Interest in these assets is not new. While the first CCs were developed after the GFC in 2008, the Covid-19 crisis gave them a spectacular boost (Bitcoin saw its value multiply by more than seven times in one year).
Challenges of Cryptocurrencies
Major risks for investing in cryptocurrencies that need to be considered in the medium and long term. Cryptocurrencies have also given rise to a new set of challenges for governments to contend with. The anonymity and portability of cryptocurrencies make them appealing to bad actors such as criminal groups, terrorist organizations, and rogue states. There are also uncertainties about the regulatory treatment of emerging financial technologies. In addition, crypto mining can require enormous amounts of electricity, which has led to concerns about its environmental effects. Meanwhile, the rise of DeFi and crypto payments has raised questions about consumer protection, market volatility, and the ability of central banks to carry out monetary policy.
From here we will conclude what are the advantages of the cryptocurrencies: Much has changed in the last several years for cryptocurrencies, including a growing awareness by institutional brokers, regulators, and currency traders. The latter has a particular interest in promoting cryptocurrency trading due to the expected growth of the market and potential profits. While broad acceptance remains small, more examples arise of vendors and even countries announcing they would be accepting Bitcoin transactions.
Bitcoin and other prominent cryptocurrencies have gained much attention since the last several years. Globally known as digital coin and virtual currency, this cryptocurrency is gained and traded within the blockchain system. The blockchain technology adopted in using the cryptocurrency has raised the eyebrows within the banking sector, government, stakeholders and individual investors. The rise of the cryptocurrency within this decade since the inception of Bitcoin in 2009 has taken the market by storm. Cryptocurrency is anticipated as the future currency that might replace the current paper currency worldwide. Even though the interest has caught the attention of users, many are not aware of its opportunities, drawbacks and challenges for the future. Researches on cryptocurrencies are still lacking and still at its infancy stage. In providing substantial guide and view to the academic field and users, this paper will discuss the opportunities in the cryptocurrency such as the security of its technology, low transaction cost and high investment return. The originality of this paper is on the discussion within law and regulation, high energy consumption, possibility of crash and bubble, and attacks on network. The future undertakings of cryptocurrency and its application will be systematically reviewed.
It is undeniable that the emergence of cryptocurrency will play a significant role in the world’s economic fabric. It is the fact that every economist, researchers, investors alike has to act and considerable measures to strengthen their knowledge on the blockchain technology in general (Fauzi et al., 2019; Fauzi et al., 2018a).
As cryptocurrency has not yet reached maturity in term of time frame, further studies on its technology, potential and risk should be studied to ensure that the opportunities are not just a mere fluke. Also, the upcoming challenges do not mitigate stakeholders into the doldrums of financial failures.
Cryptocurrencies are here to stay. The future of trading lies well with new emerging technologies that are able to benefit mankind. Needless to say that, users and industry player can evaluate whether cryptocurrency can benefit or harm them, in accordance with their objectives and perspectives in owning it. This article has reviewed the opportunities in cryptocurrency in term of its security of its technology, low transaction cost and high investment return. For the challenges, the discussion revolved around law and regulation, high energy consumption, possibility of crash and bubble, and attacks on network. The improvement and future work on cryptocurrency include improving the security protocol, working on proof of activity, using the byproduct of proof of work and applying the knowledge management system. Looking at the positive outlook of the blockchain technology and the prospect of government in regulating cryptocurrency, more in-depth studies on several aspects of cryptocurrency should be done. Taking the opportunities from part of the pie in the cryptocurrency and blockchain technology can be beneficial for researchers. From then, application in using cryptocurrency in the best of its ability would be one of the most prominent discoveries in the 21st century.
Future of Cryptocurrencies
Whatever the future of cryptocurrency holds, there’s a lot of work to be done to balance the risks with the rewards, and there’s a lot of opportunity for the brands and individuals who take on the task. The discussion is no longer one of whether cryptocurrency will survive, but rather how it will evolve—and when it will reach maturity.
Perhaps in the future, cryptocurrencies will finally be used for their creators' original intent: to pay for things. But before that happens, the world will need to make extremely massive, sweeping adjustments that will not be easy to pull off. A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April 2013 when it peaked at a record $266 per Bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $2 billion at its peak, but a 50% plunge shortly thereafter sparked a raging debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The answer lies with Bitcoin.
Some of the limitations that cryptocurrencies presently face – such as the fact that one’s digital fortune can be erased by a computer crash, or that a virtual vault may be ransacked by a hacker – may be overcome in time through technological advances. What will be harder to surmount is the basic paradox that bedevils cryptocurrencies – the more popular they become, the more regulation and government scrutiny they are likely to attract, which erodes the fundamental premise for their existence.
Crypto has always been volatile, both in price and in consumers’ perception. Despite the explosion in recent years, what the future of cryptocurrency holds is still unclear. For the average investor, for government regulators, and for those attempting to make crypto greener, this is a time of paradoxes to navigate. If one thing is certain, it’s that the market in 5 years’ time could be just as unrecognizable to us now as the market was 5 years ago.
There is no assurance that persons and companies who accept cryptocurrency as payment today will continue to do so in the future. As such, this begs the question: will crypto replace cash or any other typical currency? The answer isn't as straightforward as you think. Despite this, there's little sign that investors or companies are backing down from the potential reward crypto has to offer.
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(All the material in this article are only the views of the author, and couldn’t be taken as “Financial Advice”)
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