Cryptocurrency gained immense popularity within a decade of its existence. But ever since it was introduced, while the technology is evolving rapidly, the debate about its ability to replace existing forms of currency has remained as wild as day one, only, the number of people on both sides of the camp is increasing. To even begin understanding the debate, it’s essential to revisit the basics.
According to Oswego State University of New York, a cryptocurrency is a virtual currency, which enables the transfer of money based on encrypted algorithms. The use of encryption technology features crypto both as a digital currency and also as an coded accounting system. Some major crypto currencies are Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), etc.
As described by Forbes, BTC was the first crypto, and is the most well-known among the 19,000 odd cryptocurrencies. BTC was created by an anonymous identity or a group of peopleperson(s) called Satoshi Nakamoto, with an aim to establish “an electronic payment system based on cryptographic proof instead of trust.”
BTC is based on a distributed digital system meant for recording transactions called Blockchain. It is an entirely interconnected body of data, formed by combining sub-units termed as blocks consisting of complete information of each transfer. They are finally linked together in a chronological order, of an outcome as chains of blocks. The information and the order of the transactions (sequence of the blocks) cannot be altered.
Crypto is gradually seeping into various sectors; its wide-ranging adaptability has made masses take a look at its advantages. In 2021, El Salvador was the first nation in the world to declare BTC as an official currency in a Legislative assembly. Next, the Central African Republic adopted BTC as legal tender in April 2022.
According to Investopedia, Blockchain is a technology which has proved to be a gamechanger for a large number of industries, from banking, healthcare, sports, food and many more. The supermost plus point provided by it, is the removal of any intermediaries, authorities and centralized body, making it entirely centralized.
Stability, though controversial, is another advantage that can be seen in crypto, due to its limited supply, unlike fiat currency. But major events such as the ongoing Russia-Ukraine war, Europe energy crisis have questioned deflationary promises made to the crypto investors.
BTC was currently trading at $16,571.35 at the time of writing. This year’s crypto winter weighed heavily on BTC – it struggled to cross the $20,000 mark. Although those who believe in the immense potential of the crypto industry will stick to the arena, as BTC bounces back each time it is dragged to ground. Only 21 million bitcoins will be in circulation as per the original code. However, that limit can be increased based on the demand.
Disclaimer: The views given in the article solely belong to the writer. Readers are advised to “DYOR” by their side. Any financial loss or damage borne by the reader is absolutely their responsibility.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
