Cryptocurrency - Future or Mirage?
Today, the minute you start watching any news channel or surf the internet, immediately some news or other on 'Bitcoin or Blockchain' pops up.
Currently, the idea of crypto-currencies is one of the most debated topics in the world of finance. Some eminent figures, like Jamie Dimon of CEO, JP Morgan have termed it as a "fraud" and called those trading in it as "stupid." But many other leading opinion-makers endorse crypto-currencies as one of the most revolutionary force of the future in the world of finance.
But, amid this chaos, there are a whole host of people who wonder what exactly is bitcoin and why this stuff is trading so high? In this blog, we would like to demystify some of these concerns.
History of Cryptocurrency
Cryptocurrency, as an entity has been in existence for a long time now. It emerged and came into being way before the currencies in today's virtual instance emerged. Then it existed in the form of mathematical algorithms and principles from the field of computer science, technically the codes and scripts which were used to curtail past the shortcomings of currencies, practical and political at times.
What is Cryptocurrency?
Ever since the arrival of Bitcoin as early as 2009, many similar projects using the same underlying idea have come up. This has led to the coining of the term ‘Cryptocurrency’, as a collective denomination to such virtual currencies.
The first obstacle that a layperson encounters in this new world is to understand its language. The core idea of such crypto-currencies is the concept of "Blockchain". According to Wikipedia, a blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp, and transaction data. By design, blockchains are inherently resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".
In a more simple term, cryptocurrency is something that is public and is free for anyone to join and be a part of. Though they differ a lot from one another in terms of their details, the algorithms, cryptography of the public to the private key, the applications about the real world, the transactions, and of course, maintaining the secrecy of the account.
Cryptocurrency an entity of the virtual world is built using blockchain technology which is nothing but an array of protocols in the cryptographic language, a code that is extremely complex in its characteristics specifically scripted to provide secure and non-decrypt able data transfers. The minds behind this rely eminently on the use of advanced mathematics, and complicated computer engineering theories to curtail and render cracking each segment next to impossible. Not only do they maintain a barrier that is impossible to break, but they also can mask the user's identity, which makes every transaction extremely personal and hides the attributes of the person or groups as concerned. Further, the concept of Cryptocurrency has been molded into its fine structure by the mechanism of decentralized control, which simply means that the whole innovation is not marked by a single server, rather all the networking components of the entity is handled by the respective users and is expected to do its job with smoother functioning and maintaining perfect stability.
Seems ordinary? But it isn’t, rather that’s how an exact definition of a currency can be framed. For example; what will happen if you take the money out of your bank account? The only thing remaining will be entries in a database, and is subject to change about specific conditions. You can take some coins and notes too, they are also entries limited in number in a database which is physical in presence, and can be changed if and only if you own the coins or notes. So, money is nothing other than a verified entity to be worthy of an entry in some database.
Bitcoin the Modern Avatar of Cryptocurrency
Satoshi Nakamoto (considered to be a fictional figure), brought open to the public the whole concept of Bitcoin, and instantly gathered a group of supporters who enthusiastically took part in exchanging and transacting with this virtual currency.
The first of its kind, Bitcoin became the most used and innovative cryptocurrency to be used publicly for exchange and transactions combined with decentralized control, giving each user the access the right to hide or showcase themselves, holding the transaction records in place through the blockchain, and ultimately the scarcity which was built-into the system.
But soon by the end of 2010, dozens of other crypto-currencies serving various purposes such as the Litecoin, Ethereum, Ripple, and many of its kind emerged.
Future of Bitcoin and other Crypto-currencies
When the future of crypto-currencies is discussed, many argue that these coins can solve many problems that the world faces today. One humanitarian use of such currency is as a solution to problems for stateless people as a way to overcome citizenship issues, so to speak.
Having proven its pre-eminence and its first-mover advantage gives Bitcoin the staying power in the market as the cryptocurrency. But what does the future hold? Its biggest risk tends to be the parallel treatment of other crypto-currencies, which has the potential to substitute it anytime and question its prominence. But as claimed by the hardcore users of Bitcoin, that due to its extremely large share in the market of about 80%, the argument becomes infructuous.
Anyway, when one sees from the context of Bitcoin's emergence, it is simply gold of this 21st century, but having no issues related to storage! Also having the utmost potential of evolving into something better shortly, but it still holds a very volatile nature, which needs careful handling.
The Hype and Bubble around Bitcoin
Although Bitcoin itself may be a bubble, the degree to which the world is looking into blockchain and cryptocurrencies illustrates that a new world is on the horizon. How exactly that market will mature is unknown. No one could have predicted what would follow when the first email was sent in 1971. Similarly when new websites such as Snapchat or Twitter first rolled out people mocked them as impractical. The creators of all these then-new technologies laughed their way to the bank.
The year 2017 just ended, but ended on a great note for Bitcoiners! Unexpectedly the market cap of Bitcoin reached as high as $370 Billion while having started with $17 Billion in Jan'17.
Seeing this huge rise, several people and cryptocurrency enthusiasts shared their prophecies, mentioned below;
The Crypto market cap may reach 1 Trillion USD by 2018 end.
Initial Coin Offerings or ICOs may take over the by financing options from IPOs & VCs.
The market shall embrace a new form of tokens.
Bitcoin and other prevailing crypto-currencies stand a chance of getting banned in many countries.
The prices of the crypto-currencies will become stable and people may return to tangible transactions.
Some of the above inferences are drawn statistically from the prevalent data, but if one goes by intuition there are 50–50 percent chances of the cryptocurrency to fail or surge. No one can truly support their opinion with 100 percent surety about what the future holds, but surely this innovation has brought about a huge change in today’s society. If this technology prevails in the times to come, it can radically change the financial system that we know and fiat currencies may ultimately disappear.