Economics and all its relations might be a dull topic, but this deception that has been told our whole lives, believe it or not, our existences are on the line, it all depends on economics and other relating factors. The one core theme of money or capital serves as the ultimate catalyst for both the best and worst aspects of human existence such as the development of society, war, poverty, industry, anything, and everything depends on economics. Money, whether we like it or not, determines our economic status and, on occasion, violates our morals. But is it undergoing a change, the money or the currency? Is it transforming to a digital form, should I say, to cryptocurrency? Or is it a sweet recipe for an upcoming financial disaster, or is it just another form of gambling? Let’s discuss…
Digital Revolution — Awareness
Digital currency is revolutionizing transactions and trying to eliminate banking, just as the internet did it to information. There isn’t a week that goes by when cryptocurrencies, a unique type of digital currency, aren’t in the press. Every other day, there are price moves that set new records. Everybody around is discussing those said cryptocurrencies. Every other person wants or has already invested in, likely creating a shame inside the listeners. Now listening to all these you are trying to weigh the pros and cons as you are new to the stuff, you are forced to place your bet being ignorant. That is where the problem lies. Handling money is something different and literally, it takes a lifetime to master it. Unfortunately, these skills are not taught anywhere. When money takes on new forms, the first thing which you want to do is to learn it from the basics, and that’s exactly what we’ll all do today.
Digital currencies are hot, but acquiring knowledge is important!
Fundamental Concepts — Cryptocurrency, Blockchain, and Bitcoin
Let’s begin by grasping the fundamental concepts: Cryptocurrency, and the other two related terms Blockchain and Bitcoin. What do they mean? Some instant definitions are: The first concept, cryptocurrency, the term crypto means data encryption, thus cryptocurrency means encrypted currency. You may have seen the term on your devices saying messages are encrypted. It means that it basically ensures the encryption or security of the messages and in this context the security of digital currencies. But unlike the banking system, debit cards, or credit cards, these cryptocurrencies don’t have any counterparts. Now comes the term blockchain, it is a technology or a software piece that helps to create cryptocurrencies and enables the existence. This blockchain has various uses and this feature is only one among them. Blockchain is like a computer file that stores data across a huge network of computers. Now lastly the name Bitcoin, this is just the name of one of the best-known cryptocurrency which was created with the aid of blockchain. Bitcoin is one type of cryptocurrency, like Euro and USD which are the names of normal currencies. Bitcoin is digital and doesn’t have a physical existence to date, it is decentralized, it exists electronically, it’s a computer code only. The existence is merely digital.
Cryptocurrency is just a product of computer technology!
These peculiarities of cryptocurrencies are really not understandable to many people, one thing behind this is they are just part of a technology and cryptocurrencies don’t have any physical existence. They just lie in the vast network of computers. Only a few people know how cryptocurrencies work, and it is interesting that most of the investors in cryptocurrencies know little to nothing about it. For instance, bitcoin has been in circulation since 2009, but no one is really not aware of the origin or creation. The mystery related to its origin or identity of its or creators is still not solved. All these years, many people have claimed the creator of bitcoin to be called Nakamoto. Still, there is no clarity and no one really knows whether it’s one person or a group of people. Referring to some sources, what Nakamoto wanted, however, was to address a possible vulnerability in digital banking: double-spending.
Cryptocurrency doesn’t have physical existence! No clarity about its origin!
More Insight On Technology
Now, what is that — double spending? Yes, for instance, one person walks into a mall, buys some grocery and pays his bill of $100, this same $100 cannot be spent anywhere else. But if the customer is paying digitally, somebody can manipulate the system and spend the same $100 more than once and that is literally called double-spending. To prevent this from happening, the government has the middlemen facility of banks and those credit card companies to keep a check on. These institutions always regulate the system and vouch for each and every transaction by recording it without fail. With the advent of cryptos developed with the help of blockchain, these regulations and controls were eliminated. Bitcoin was introduced as a decentralized currency, which means literally there is no third party controlling it. But on the other hand, it is regulated by its own community whereby recording all the transactions done by all of the members at the same time. This ensures security and any attempt to breach it might result in the rejection of the transaction. Here, a government or a bank, or any other institutions do not have any control or even cannot put any restrictions or limitations on its flow, they can’t even force a fee or curb its activities. Bitcoin is said to be secure and is said to be above all the effects of anything related to economies like inflation or currency debasement or any other type of fluctuation. It is really amazing, no? But is it really that amazing? No, it isn’t! The major issue lies within. Once a Bitcoin transaction happens, it is supposed to be of utmost security, but at the same time irreversible, which means once it is transacted, it is done. The process is completed there and nothing can be revoked.
Crypto is decentralized, nobody has control over it! It is irreversible! — Till This Time Of Writing
Bitcoin Towards $100,000? Read more below…..
The Bitter Truth
Bitcoin is considered to be highly volatile and history shows that the value fluctuates very fast. Bitcoin just surged to a fresh record high and climbed as high as $63,729 in the second week of April 2021. This was the time when, Coinbase, the largest cryptocurrency exchange, was set to go public, that is, get listed on Nasdaq. But in the consecutive weeks of April 2021, the bitcoin sank below $50,000. Yes, one can understand that this change in price happens because of the demand and supply phenomenon, clearly, when the demand goes up, the price rises. Now, what happens is, as people see that the price goes up, they might want to cash in by selling it, but not always there are buyers available in the market, but more people would intend to sell, so they lower the price and it results in a steep ride down the hill. Volatility is a huge problem. Now the other issue is the most discussed security itself. Bitcoins are contained in digital wallets which are stored in huge networks of computers and phones. These systems or networks are widely accepted as being highly vulnerable to data theft and hacking. There are several cases of even highly reputable institutions ending up spending thousands of dollars on illegal transactions after getting hacked. The best lesson to be learned is that those who are having good amounts invested in bitcoins or any other cryptocurrencies are supposed to be careful enough to create passwords that are difficult to guess and should restrain from visiting any suspicious websites or links.
Highly volatile! Highly vulnerable to data theft and hacking!
Amazing Numbers and An Interesting Story
Now the amazing numbers: how many cryptocurrencies are there? 4,000 plus! Yes, there are more than 4,000 cryptocurrencies and still counting as it is said! One would ask, why would these many cryptocurrencies exist, because why not?! The main reason is that the key software which is aiding in the creation of a cryptocurrency is open source. This basically means that anyone and everyone can create them. A lot of them are there, like, Ethereum, Tether, Litecoin, Cardano, Stellar, Monero, Namecoin, Peercoin, and Ardor. There is an interesting story related to one crypto named Dogecoin or ‘dog ecoin’, it was created as a meme, yes the creator Billy Markus and his friend created dogecoin as a parody of the better-known crypto — Bitcoin. The creators used an image of a dog and made this is as a joke. This was in 2013, but even to the surprise of its creators, now the dogecoin is well accepted and is in the mainstream. Their aim was to make fun of the situation that prevailed and to show how people would invest in anything. In the month of April 2021, the market capitalization of dogecoin surged to more than 50 billion dollars. That was the magic of people who supported using hashtags and engaging in social media that created history which is both amusing and interesting. This story acknowledges the surprising impact of online information and campaigns on anything around us. The dogecoin is a classic example where peoples’ belief makes a joke even worth 50 billion dollars.
Fascinating numbers are just related to mass belief!
The Power Of Belief Of People
Yes, this is the power of the belief of people, if they accept and believe in anything, it can happen. Always be aware of, the same facts relate to Bitcoin. Fundamentally, the reason behind the price and value of bitcoin is simply because people who deal with it believe it and agree to it. What does this tell you? This is just a crazy response to a crazy happening by the people around it, a vast majority of people are after it, investing in cryptocurrency, and are just giving it a shot.
Finally, what about the regulators or governments? There are countries such as France, Switzerland, Germany, European Union, Australia, South Korea, Netherlands, Japan, with crypto-friendly norms. The UK is supposedly working on it and coming up with a cryptocurrency, something called Britcoin. Russia is not that interested in cryptocurrencies as of now. Initially, China was not interested but then shifted its position, now considers and accepts it as an alternative. But saying all these, still, majorities of countries are not so mesmerized and attracted. The bottom line is, the future of anything might change, the currencies might become digital partially or completely, but one should be wise enough to understand that investing, in a sense, is gambling too, and if you are engaging in gambling you must also be prepared to win or lose the game!